* Investors expect Fed's Yellen to be dovish at Jackson Hole
* German private-sector growth, U.S. data beat expectations
* Citi cuts Bund yield target to 0.75 pct in Q4
(Recasts with U.S. data, market turnaround, new comments)
By Marius Zaharia
LONDON, Aug 21 (Reuters) - German Bund yields held below 1 percent on Thursday as bets that Janet Yellen would signal at a central bankers' gathering this week that the Fed was in no hurry to raise interest rates trumped better-than-expected economic data.
Investors detected a hawkish tone in the minutes of the Federal Reserve's last policy meeting, but were unwilling to bet that the chief of the U.S. central bank will maintain that tone at the annual Jackson Hole symposium.
Analysts see Yellen as more dovish than other U.S. central bankers and say her comments have usually been softer than the general tone of discussions at Fed meetings.
Expectations of her comments offset the impact of forecast-beating U.S. data, including home sales and the Philly Fed business sentiment index.
"People realise that Yellen when she speaks at the Jackson Hole meeting she could turn dovish," said David Keeble, global head of fixed income at Credit Agricole.
"The data was pretty decent, but we don't care about that when you've got central bankers about to speak. It is hard to break away from the impact that central bank policy has on markets at the moment."
German 10-year yields
Analysts expected the conflict in Ukraine, which has seen Russia and the West exchange tit-for-tat sanctions, to prevent yields from rising in the near term.
Rob Dobson, senior economist at Markit, said there was no widespread evidence of the Ukraine crisis pummelling German companies yet, even though Germany is Russia's biggest trade partner in the European Union. Some firms, however, were holding off on shipping existing orders to Russia to see if their products would be hit by sanctions, he said.
The leaders of Russia and Ukraine are set to meet next week for the first time in months to try to end their confrontation over the separatist rebellion in eastern Ukraine, but uncertainty remained high.
Citing the euro zone's weak growth outlook and geopolitical tension, Citi predicts Bund yields will drop as low as 0.75 percent by year's end. The bank's forecast for Bund yields has almost halved in the space of a month, as it sees a higher probability that the European Central Bank will begin an asset-purchase programme, known as quantitative easing, to re-start a stalled economy.
It is not alone in expecting yields to decline further.
"We do still see the scope for yields to fall further if we see an increase in geopolitical tensions in the coming weeks and months," said Marius Daheim, chief strategist at Bayerische Landesbank.
(Additional reporting by John Geddie; Editing by Susan Fenton) ((marius.zaharia@thomsonreuters.com)(+44 207 542 0950)(Reuters Messaging: marius.zaharia.thomsonreuters.com@reuters.net))
(( --------------MARKET SNAPSHOT AT 1529 GMT ------------------ Futures continuous contract basis Current levels versus prior European closeFUTURES CASH YIELD THREE MONTH EURO 99.820 (-0.005) 0.011 (+0.001) TWO-YEAR SCHATZ 110.730 (-0.005) -0.002 (+0.003) 10-YEAR BUND 150.190 (-0.130) 0.995 (+0.009) 30-YEAR BUND 1.841 (+0.006)
2/10 YIELD CURVE SPREAD 0.997 (+0.006) 10/30 YIELD CURVE SPREAD 0.846 (-0.003)
2-YR SWAP RATE (BID) 0.302 (-0.003) 10-YR SWAP RATE (BID) 1.202 (+0.001) 30-YR SWAP RATE (BID) 1.852 (-0.001) 2/10 SWAP CURVE SPREAD 0.901 (+0.004) 10/30 SWAP CURVE SPREAD 0.650 (-0.002) 2- YR BUND/SWAP SPREAD 0.304 (-0.006) 10-YR BUND/SWAP SPREAD 0.207 (-0.008)
BREAKEVEN RATE (OATei 07/20) 1.757 (+0.027)
10-YR BUND/UST SPREAD 1.426 (-0.016) 10-YR BUND/OAT SPREAD 0.392 (-0.002) 10YR BUND/BONO SPREAD 1.403 (+0.010) 10-YR BUND/BTP SPREAD 1.594 (-0.013) 10-YR BUND/GGB SPREAD 3.927 (-0.007)
10-YR ITALIAN BTP FUTURE 129.000 (+0.090) ))
Keywords: MARKETS BONDS/EURO
