* French 10-yr, German 20-yr yields turn positive
* Upbeat German industrial data boosts yields
* China-U.S. "phase one" trade deal priced in - analyst
* Euro zone periphery govt bond yields http://tmsnrt.rs/2ii2Bqr (Updates prices, eurozone PMI, adds chart)
Nov 6 (Reuters) - France's 10-year government bond yield briefly turned positive on Wednesday for the first time since July as upbeat German data and optimism surrounding China-U.S. trade talks lifted borrowing costs across the euro area to 3-1/2 month highs.
The equivalent Bund yield rose as high as -0.3% after better-than-expected German industrial orders pointed towards stabilising conditions in the euro zone's biggest economy, before erasing gains.
Germany's 20-year bond yield, which briefly turned positive on both Tuesday and Wednesday, touched a high of 0.005% before dropping back just below zero, at -0.0149%..
The French 10-year yield rose to 0.001%, while Austrian 10-year yields hit three-month highs at -0.0830% .
Commerzbank rate strategist Christoph Rieger said the German data had added selling pressure on Bunds in particular, as did a Financial Times article by the German finance minister calling for a euro zone banking union.
"We have global risk sentiment that has been improving obviously for some time - now additionally European risk sentiment could at least receive some support from the latest proposals on a banking union," Rieger said.
"All this basically adds to selling pressure in Bunds in particular."
The United States and China, the world's two biggest economies, have signalled they are pushing hard for a "phase one" trade agreement, possibly some time this month, and Rieger said the market was "fully expecting" a deal to be signed.
China is seeking the removal of U.S. tariffs imposed on Sept. 1, as well as some relief from earlier tariffs, people familiar with the negotiations said on Monday.
The location of a meeting between the countries' leaders has yet to be decided.
As world market sold off, Japanese government bond (JGB)yields shot higher, with receding expectations of an interest rate cut by the Bank of Japan also weighing.
The 10-year JGB yield hit -0.075%, its highest since late May.
Analysts say rate cuts and easing measures from major central banks including the U.S. Federal Reserve and the European Central Bank have lowered recession risks.
German asset management firm DWS said on Tuesday the risk of a global recession was very low. Georg Schuh, chief investment officer for EMEA, predicted a one-in-four chance of ECB chief Christine Lagarde delivering an interest rate hike in her first year in office.
However, German composite PMI data - which edged up from the previous month more than was expected at 51.6 - was still one of the weakest performances in the past six years.
(Reporting by Elizabeth Howcroft; editing by John Stonestreet and Angus MacSwan)