By John Geddie
LONDON (Reuters) - Euro zone government bond yields fell on Tuesday ahead of the Bank of England's second attempt to buy long-dated debt under its relaunched quantitative easing programme.
Yields across the bloc were hauled lower by a fall in British bond yields last week to record lows after the BoE failed to meet its target to buy longer bonds.
Some analysts said the failure underlined the unwillingness of investors to sell long-dated debt that offers the highest returns, signalling that a scarcity of bonds could prove problematic for the central bank's stimulus programme.
That problem may not be as acute on Tuesday though, the analysts said, with the government selling 30-year bonds on Wednesday which may make investors more willing to part with old stock and make room for the new supply.
The Bank of England said it would make up for any shortfall during the second half of its six-month purchase scheme.
The results of Tuesday's auction will be released at 1345 GMT.
"Memories from last week's uncovered BoE auction ... are still fresh," Commerzbank (DE:CBKG) analyst Christoph Rieger said. "A repeat today with a resulting squeeze higher in gilts and Bunds seems unlikely though."
Euro zone bond yields were slightly lower on the day, with benchmark 10-year German bond yields down 2 basis point at minus 0.08 percent, according to Tradeweb.
This reversed a slight rise seen on Monday after data showed the European Central Bank had slowed its purchases of bonds last week.
ING strategists said the ECB is on track for net monthly purchases of 61 billion euros in August, well below its 80 billion euros target, although purchases of government bonds will continue to do the "heavy lifting" as buying of corporate debt tails off.
The broader picture for bond investors is one of central bank easing, with a weak outlook for global growth and inflation.
Minutes released on Tuesday from the Australian central bank's meeting earlier this month where it cut rates to record lows, showed it predicted inflation would remain below target for another two years.
Minutes from recent meetings of the European Central Bank and U.S. Federal Reserve are due later this week.
On the data front, Britain will release July inflation at 0830 GMT, while the ZEW survey of German investor sentiment is due at 0900GMT.
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