* Treasury yields hit all-time low in fresh bond rally
* European shares down 1.5 percent, London's FTSE up on BOE
plans
* Wall Street expect to open down 0.5 pct
* Gold, silver dip from near 2-year high
* Oil slips roughly $1.5 on fears economic slowdown will sap
demand
By Marc Jones
LONDON, July 5 (Reuters) - U.S. government bond yields, the
benchmark for global borrowing costs, hit an all-time low on
Tuesday and the yen jumped as weak Chinese data and Brexit
worries triggered a fresh scramble for the safest and most
liquid assets.
Risk aversion swept though markets as data showing China's
manufacturing growth stalled last month coupled with warnings
from the Bank of England that the UK's vote to leave the
European Union was already having an economic impact.
Investors made a dive for bonds, sending 10-Treasury yields
as low as 1.377 percent US10YT=RR and Swiss yields CH50YT=RR
negative all the way out to 50 years on bets the world's major
central banks will wade in with yet more stimulus.
"Everything is still being driven by one main factor and
that is that central banks still have their taps on," said Neil
Williams, chief economist at fund manager Hermes.
"It seems to me that Brexit has global implications ... and
when an $11 trillion economy (China) which accounts for a large
chunk of the world's commodity demand slows down, you have to
take notice."
Stocks were firmly out of favour. Wall Street was expected
to reopen after a long weekend down roughly 0.5 percent N/ .
European shares .FTEU3 were down 1.5 percent as weaker
commodity stocks and ongoing worries about Italian banks that
have seen their value drop almost 60 percent this year .EU
more than offset small rise for London's FTSE .FTSE on the
back of Bank of England rate cut hints.
In the currency market, the safe-haven yen rose almost one
percent against the euro EURJPY= and dollar JPY= FRX/ as
Brexit-battered sterling GBP= hit another 31-year
low.
Uncertainty in the run-up to Britain's vote on its EU
membership last month had already seen growth in its dominant
service sector hit a three-year low data showed and pushed
businesses expectations to their weakest since the end of 2012.
Bank of England Governor Mark Carney said he thought the
bank would need to cut it already record low interest rates and
possibly provide other stimulus over the summer to cushion the
Brexit shock.
"There is a prospect of a material slowdown in the economy,"
he added, warning also that the UK had "entered a period of
uncertainty and significant economic adjustment."
Insurers Aviva (LON:AV) and Standard Life (LON:SL) have both suspended
property funds as a result of withdrawals.
"The problem these funds face is that it takes time to sell
commercial property to meet withdrawals, and the cash buffers
built up by the managers have been eroded by investors heading
for the door, both in the run up to the EU referendum," said
Laith Khalaf, senior analyst at Hargreaves Lansdown (LON:HRGV).
Sterling slumped to a new 31-year low of $1.3112 as it fell
1.3 percent on day GBP=D4 .
U.S. DATA, FRAGILE CHINA
The U.S Commerce Department will release a report that is
expected to show later ECONG7 that new orders for
manufacturing goods fell by 1 percent in May, compared to 1.9
percent in April.
The overnight data from China had shown that while the
country's growing services sector saw activity rise to an
11-month high in June, a composite measure of activity including
manufacturing fell to a four-month low.
Nervousness was also seeping back in about Beijing's
intentions for its currency, the yuan, as the country's central
bank fixed its daily yuan/dollar reference rate CNY=SAEC at a
fresh 5-1/2-year low.
Back in Europe, the euro EUR=EBS slid 0.2 percent to
$1.1130, but retained most of the gains made since its 3
1/2-month low of $1.0912 hit in the wake of the UK referendum,
while the yen JPY= jumped 0.8 percent as it slice back above
102 to dollar to 101.79.
The 'risk-off' sentiment was further compounded as oil fell
below $50 a barrel on Tuesday, as concern about a potential
slowdown in economic growth that would weigh on demand trumped
supply outages in Nigeria and other exporting nations.
Brent crude LCOc1 was down $1.42 at $48.67 a barrel and
U.S. crude dropped $1.54 at $47.45 a barrel. O/R
(Editing by Jeremy Gaunt)