(Updates after U.S. jobs data)

By Harry Robertson and Stefano Rebaudo

Aug 2 (Reuters) - German government bond yields tumbled

on Friday to their lowest level in around six months as

investors snapped up sovereign debt after weak U.S. economic

data raised fears for global growth and caused stocks to fall

sharply.

Data on Friday showed the U.S. economy added 114,000 jobs in

July, down from 179,000 in June and well below the 175,000

economists expected. The unemployment rate rose to 4.3%, from

4.1%, raising market expectations for Federal Reserve interest

rate cuts this year.

Germany's 10-year bond yield, the benchmark for

the euro zone, extended a decline after the jobs data and was

last down 10 basis points to 2.151%, the lowest since February.

The yield, which moves inversely to the price, was set to

end the week 25 bps lower, the biggest fall since mid-June.

Tensions in the Middle East and Thursday's Bank of England

interest rate cut also burnished the appeal of bonds, although

the debt of euro zone countries that are seen as riskier

investments, such as Italy, fared less well.

"We are seeing strong moves across major markets," said

Emmanouil Karimalis, macro rates strategist at UBS.

"It is a combination of several factors: the BoE cut has set

a more bullish tone this week, while markets are also increasing

their expectations for a Federal Reserve cut," he said.

"The weakness in the stock market, escalating geopolitical

tensions in the Middle East, and a slowdown in European

government bond supply in August are all supportive factors for

European bonds."

Germany's two-year bond yield, which is sensitive

to ECB rate expectations, was last down 12 bps at 2.345%, its

lowest level since January.

Data on Thursday showed U.S. jobless claims rose more than

expected last week to 249,000, the highest since August 2023.

In addition, a measure of U.S. manufacturing activity

dropped to an eight-month low in July amid a slump in new

orders.

Stocks dropped around the world on Friday, with a broad

pan-European index down around 2.2% and U.S. futures

down 1.8%.

Concerns about the global economy led riskier government

bonds to underperform their peers, with the Italian and French

yield spreads versus German bonds widening respectively to 146

basis points (bps), the highest in almost a month,

and to 78 bps, the highest since last month's

French election.

Italy's 10-year bond yield fell 3 bps to 3.612% while

France's was down 5 bps at 2.944%.

Money markets priced in almost 70 bps of further European

Central Bank rate cuts in 2024, from about 50 bps a week ago

.