LONDON- An emergence of new COVID-19 variants that could evade current vaccines is viewed as the biggest risk to financial market stability, Deutsche Bank's monthly investor survey said on Monday.

More than half (58%) of respondents cited potential "new variants that bypass vaccines" as their top global concern, according the survey of nearly 700 market participants conducted between April 21-23.

There has been an explosion in COVID-19 cases in India this month, with new hitting a record peak for the fifth day in a row on Monday. Coronavirus death tolls are also hitting record highs in Latin American countries. 

Higher than expected inflation and bond yields were next with 43% of respondents placing it as their top worry, while geopolitics and an uneven global recovery and vaccination campaign polled at 30% and 28% respectively.

Fears of a "taper tantrum" - central banks spooking markets by tightening monetary policy too early - have dropped to the lowest so far this year. A total of 21% of respondents now see a tantrum-style event this year versus 33% back in January.

The sell-off in U.S. Treasuries and German Bunds was expected to resume however.

On inflation, respondents saw divergence between the United States and Europe. It was expected to average between 2% and 3% in the U.S. over the next five years, versus between 1% and 2% in Europe in that time.

The survey also showed that just over half (52%) of British respondents expect life to be close to normal in terms of lockdown restrictions being lifted by the end of the summer, compared to 46% of Americans and a third of non-British Europeans.

By contrast, 57% of Asian respondents do not see normality returning until 2022 or later.

(Reporting by Elizabeth Howcroft; editing by Marc Jones) ((Elizabeth.Howcroft@thomsonreuters.com; +44 02075427104;))