(Updates after morning trading, adds comments throughout)

By Jaspreet Kalra

Sept 1 (Reuters) - Long-dated euro zone bond yields rose

on Monday as investors continued to fret over government debt

levels around the world and also digested strong business

activity data for European economies.

Germany's 30-year yield rose to a 14-year peak

of 3.381% before cooling to 3.35%, up 1 basis point.

Other long-dated euro zone yields, including in France and

the Netherlands, touched their highest level since 2011,

extending moves from August when super long-dated yields posted

their biggest monthly jump in five months, while long-dated debt

remained under pressure across developed economies.

And while investors are far from panicking about the rise,

it has got them a little jittery.

"When I think about worries to our relatively optimistic

view, a big wobble in the bond market is probably the number one

thing I'm worried about," said Talib Sheikh, multi-asset

portfolio manager at Fidelity International.

Investors were processing the euro zone manufacturing

Purchasing Managers' Index (PMI), which

rose

to an over-three-year high of 50.7 in August from 49.8 in

July.

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

zone bonds, was up 1 bps at 2.736% after touching a peak of

2.758%.

France's 10-year yield was steady at 3.518%

after hitting its highest level since April.

In addition to global fiscal worries, political developments

in France - with Prime Minister Francois Bayrou's minority

government at risk of collapse in a September 8 confidence vote

- have also been a drag for the country's government bonds.

The developments have also contributed to a widening of the

spread between German and French 10-year bond yields, a measure

of the premium investors seek for holding French debt over

German, which was last at 78 basis points after

last week reaching its widest since April.

"We have maintained our year-end target for the 10y OAT-Bund

spread at 70bp, but see risks tilted towards wider spreads,

especially if fresh parliamentary elections become a more

central case to the market," analysts at Goldman Sachs said in a

note.

European Central Bank President Christine Lagarde said on

Monday she was looking very attentively at the French bond

spreads but that France was not currently in a situation that

would require IMF intervention.

Elsewhere, the focus is on key U.S. labour market and

business activity data peppered over the course of this week.

The data is expected to influence expectations of rate cuts by

the U.S. Federal Reserve.

Money markets are currently pricing in a near 90% chance

that the Fed will lower benchmark rates by 25 basis points in

September, per CME's FedWatch tool.