Aug 13 (Reuters) - German 30-year bond yields fell on

Wednesday, retreating from a 14-year high hit the previous day,

as investors stepped back from aggressive selling due to

geopolitical uncertainty linked to U.S. President Donald Trump's

efforts to end the Ukraine war.

Analysts said peace in Ukraine would ultimately support

appetite for risk assets and consequently weigh on bond prices,

which move inversely with yields. An end to the fighting could

also lead to increased bond issuance, keeping pressure on

prices, as Europe finances Ukraine's reconstruction.

Analysts were sceptical, however, regarding the prospects

for quick progress after the White House said Friday's Alaska

summit between Trump and Russian President Vladimir Putin would

be "a listening exercise for the president".

Germany's 30-year government bond yield was down

5 basis points at 3.25%, after rising 15 bps in the previous

three sessions. It hit 3.3090% on Tuesday, its highest level

since summer 2011.

Policy-sensitive German two-year yields were down

2.5 bps at 1.94%, while German 10-year yields - the

euro area's benchmark - dropped 5 bps to 2.70%.

Analysts mentioned the Dutch pension reform, which is

expected to reduce demand for long-dated bonds, and expectations

for a massive increase in German fiscal spending as the main

drivers of Tuesday's sell-off.

They expect a growing imbalance between bond demand and

supply to weigh on prices.

Tuesday's move steepened curves across the euro area - a

dynamic that occurs when long-dated yields rise faster than

short-dated ones - reversing a flattening trend that had

persisted almost uninterrupted since mid-July.

"We have been in the steepener camp, not just for the U.S.,

but globally," said Mohit Kumar, economist at Jefferies.

"In the U.S., the long end is unlikely to rally given

credibility and fiscal concerns. In Europe, the long end would

be under pressure," he added.

The gap between 2-year and 30-year German bond yields

tightened to 131 bps from 135 bps the day before.

Tuesday's U.S. inflation data is expected to have little

impact on the Federal Reserve's policy path, with markets still

pricing in a more than 90% chance of a rate cut in September.

"We see little in the July consumer price report to push the

Fed decisively toward a September rate cut. We look to the

August payrolls release for the final word," said Andy

Schneider, senior U.S. economist at BNP Paribas.

Italy's 10-year yield was down 6 bps at 3.50%.