* Ifo business climate index rises in September
* But expectations deteriorate
* U.S. consumer confidence falls most in nine months
* UK supreme court rules against Boris Johnson
* Euro zone periphery govt bond yields http://tmsnrt.rs/2ii2Bqr (Recasts, adds U.S. consumer confidence, Spanish and Portuguese debt, analyst comments)
By Dhara Ranasinghe and Yoruk Bahceli
LONDON, Sept 24 (Reuters) - Euro zone bond yields fell on Tuesday after a German sentiment survey and a fall in U.S. consumer confidence kept alive fears of economic recession on signs that service sector resilience is finally starting to crack.
Germany's Ifo sentiment survey showed business confidence improved in September but expectations for the outlook deteriorated as Europe's largest economy teetered on the brink of recession.
The data followed dismal readings from purchasing managers' indexes which showed German private-sector activity shrinking in September for the first time in more than six years and growth in services also slowed.
In the wake of Monday's PMI, German Bund yields had their biggest one-day decline since June 18, when a dovish speech by ECB President Mario Draghi sent bond yields sharply lower. They lost more ground after the Ifo, with 10-year benchmark yields down 2 basis points at -0.60%.
Other higher-rated euro zone government bond yields were also down 1 to 2 basis points on the day.
"The outlook index is still pretty dire and while current conditions on the Ifo index showed an improvement, it is still pretty weak," said Chris Scicluna, head of economic research at Daiwa Capital Markets in London.
A U.S. consumer confidence survey furthered concerns, falling by the most in nine months in September, as Americans saw the economic outlook darkening in the face of the U.S.-China trade war.
Investors fear the manufacturing recession, pretty much evident across the developed world, is now starting to infect services which had until now held up well and kept economies overall still in growth-mode, especially in the United States.
"If the data is anything to go by, the U.S. is not going to stay insulated for very long from the malice of falling economic sentiment," said ING senior rates strategist Antoine Bouvet.
Spanish 10-year yields fell more than peers, down 3 bps on the day.
"Spain is one of the few European countries in which we keep having good GDP prospects. The debt-to-GDP ratio decline is higher than other countries such as France, Belgium or even Germany which is now facing recession fears," said Natixis fixed income strategist Cyril Regnat.