By John Geddie

LONDON, May 2 (Reuters) - German bond yields fell on Monday, regaining some of the ground lost last week on the anniversary of one of the biggest Bund routs in history.

Falling oil prices and unconvincing economic data from the world's second largest economy China underpinned demand for the European benchmark in holiday-thinned trading.

Ten-year yields fell 2 basis points to 0.26 percent , steadying after Friday's 6 bps rise which pushed yields to within a whisker of six-week highs. Trading volumes were reduced on Monday by holidays in Britain and across Asia.

Bund yields have risen for three consecutive weeks, their worst run since a sell-off a year ago when yields shot from a 0.05 percent record low to over 1 percent in a matter of weeks.

But strategists are not expecting a similar blow out this time around.

"The initial parallels with the stunning sell-off exactly one year ago cannot be dismissed but we see markets much better protected this time around," Commerzbank strategist Rainer Guntermann said.

Oil prices - which often drive inflation expectations and bond yields - fell on Monday as rising production in the Middle East outweighed a decline in U.S. output.

The challenging outlook for global growth also supported demand for safe haven Bunds after a survey released on Sunday showed that activity in China's manufacturing sector expanded only marginally, raising doubts about the sustainability of a recent pick-up in the economy.

Of the economic readings due on Monday, investors will be closely watching manufacturing data from the United States which could firm support for an interest rate rise next month.

Dallas Federal Reserve President Robert Kaplan said he could back a rise in rates as soon as June or July if U.S. economic data firms up as he expects, comments that triggered selling in bonds on Friday and pushed yields higher.

"The only stimuli that could move the markets are likely to come from the ISM tracking the US manufacturing sector, due out in the afternoon: we see this consolidating in the wake of the marked brightening in sentiment noted in the previous month," DZ Bank strategist René Albrecht said.

Elsewhere, Portuguese yields fell 2 basis points to 3 percent after rating agency DBRS maintained its only investment grade rating on Friday, ensuring that its bonds remain eligible for the European Central Bank's bond buying programme.

(Editing by Andrew Heavens)