LONDON- Germany's 10-year bond yields rose to their highest in just over a week on Monday, reflecting a slightly brighter tone in world markets as the death toll from the coronavirus slowed across major European countries including France and Italy.

But the selloff was modest, reflecting heightened uncertainty triggered by the virus outbreak and the significant damage being inflicted on the economy.

Italy reported its lowest daily COVID-19 death toll for more than two weeks on Sunday, while France's daily death count fell in the past 24 hours. 

In Spain, which has the second-highest coronavirus death toll in the world after Italy, the pace of deaths slowed again on Monday. 

"With aggressive policies of social distancing and testing (and good healthcare systems), there is light at the end of the tunnel," said Erik Nielsen, group chief economist at UniCredit, said in a note.

"But now the bad news: It’s still a long tunnel."

Analysts note that the United States and Britain are still yet to see a peak in terms of coronavirus cases, while countries in Asia that had successfully managed to control the first stage of the virus outbreak are now battling a second wave.

The toll the lockdowns will have on economic growth globally, alongside massive central bank easing, suggested bond yields would remain low for some time, they said.

Data released later on Monday was expected to provide some indication of the scale of ramped-up European Central Bank bond purchases in the past week.

Orders for German-made goods dropped 1.4% in February, data showed on Monday, as a sharp fall in orders from abroad hinted at the likely impact of the coronavirus on the exporting powerhouse's economic prospects.

Investor morale in the euro zone, meanwhile, fell to an all-time low in April, the Sentix survey showed. 

Most 10-year euro zone bond yields rose around 2-3 basis points .

Germany's benchmark 10-year bond yield rose to -0.39%, its highest in just over a week, but holding below recent 10-month highs at -0.14%.

Italian bond yields gave up initial falls, with 10-year yields last up 3 bps on the day at 1.57%.

Analysts said this may reflect unease ahead of a Eurogroup meeting that kicks off on Tuesday to address ways to protect the euro zone economy from the coronavirus fallout.

Euro zone finance ministers must have an open discussion on so-called 'coronabonds' as a tool to combat the economic damage, their chairman Mario Centeno said at the weekend.

"While virus hopes support risk sentiment, the periphery should be held back by still low odds for coronabonds and ratings already start weakening," said Commerzbank rates strategist Rainer Guntermann.

(Reporting by Dhara Ranasinghe, editing by Ed Osmond) ((Dhara.Ranasinghe@thomsonreuters.com; +442075422684;))