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Euro zone bond yields brace for PMI's, Lagarde speech

Dhara Ranasinghe

* Euro zone periphery govt bond yields http://tmsnrt.rs/2ii2Bqr

LONDON, Nov 22 (Reuters) - Most euro zone government bond yields were little changed on Friday as markets awaited the release of key business activity data, as well as a speech from new European Central Bank President Christine Lagarde.

After a relatively lacklustre week in regional debt markets, driven by headlines related to U.S.-China trade relations, focus returned to the euro zone economy.

IHS Markit's final Purchasing Managers' Index for major euro zone economies is due for release from 0815 GMT. The data is a well-regarded gauge of economic health with investors looking for any signs that a downturn in sentiment is bottoming out.

"The PMIs are likely the most important data points of the week, and consensus is leaning towards a continued bottoming-out of sentiment within the euro zone," analysts at Mizuho said in a note.

"In spite of this, the market would probably be more reactive to a disappointing reading, which would suggest the worse is yet to come."

ECB chief Lagarde is scheduled to deliver a keynote speech in Frankfurt during the morning session and will be watched closely ahead of Lagarde's first ECB meeting next month.

Analysts said Lagarde was likely to strike a compromising tone, with the aim to re-unite a governing council deeply divided by September's decision to re-start controversial asset purchases.

In early trade, most 10-year bond yields in so-called "core" markets such as Germany, France and the Netherlands were little changed on the day.

Germany's benchmark 10-year bond yield was flat on the day at -0.32%, off near three-week lows hit earlier in the week. It was also little changed on the week.

Italy's 10-year bond yield was 3 bps higher on the day at 1.32%, but set to end the week a touch lower after four straight weeks of rises. (Reporting by Dhara Ranasinghe; Editing by Alex Richardson)