(Updates with euro zone PMI data, comment)
By Lisa Barrington
LONDON, Sept 23 (Reuters) - German Bund yields bounced off one-month lows on Wednesday after euro zone PMI data met expectations, easing fears of grimmer figures spurred by poor Chinese survey numbers overnight.
The euro zone data showed a small overall slowdown in business growth, but was broadly in line with a Reuters poll taken before the Chinese PMI and indicated growth in France.
"A lot of people are saying that the data isn't as weak as people assumed," Merrion Stockbrokers chief economist Alan McQuaid said.
Activity in China's factory sector failed to improve in September as expected, and instead shrank for a seventh straight month to its weakest level in 6-1/2 years, the preliminary Caixin/Markit China Manufacturing Purchasing Managers' Index showed.
German 10-year Bund yields, which set the standard for euro zone borrowing costs, were a touch higher at 0.62 percent, having dipped to 0.59 percent at the open, matching the one-month low hit on Tuesday.
Bund yields have fallen about 20 bps in September as the slowdown in China has prompted major central banks across the world to shift to a softer tone.
The U.S. Federal Reserve left interest rates unchanged last week, with a minority in the market having expected the first hike in a decade.
Bond fund giant PIMCO said on Tuesday the pace of Fed rate increases is likely to be even more gradual than the firm expected in March and that the U.S. central bank may find it impossible to escape the effective lower bound of policy rates.
ECB policymakers have said in recent days the bank could expand its trillion-euro bond buying stimulus programme if necessary.
European Central Bank President Mario Draghi's testimony to the European Parliament will be watched for reactions to increased global growth worries.
"We look for ECB President Draghi to reiterate the ECB's readiness to act," said David Schnautz, rate strategist at Commezbank.
Other euro zone bond yields were flat or a touch higher.
(Additional reporting by Marius Zaharia; Editing by Toby Chopra)