(Updates rates) LONDON, Aug 16 (Reuters) - Borrowing costs in Germany, the euro zone’s benchmark bond issuer, briefly dipped on Monday to their lowest level in just over a week as latest data from the world’s biggest economies cast a shadow over the growth outlook. The Taliban’s seizure of power in Afghanistan also supported bond markets, seen as a safe haven at times of geopolitical uncertainty. The militants entered the capital almost unopposed on Sunday while Western nations scrambled to evacuate their citizens. Data showed China’s factory output and retail sales growth slowed sharply and missed expectations in July, as new COVID-19 outbreaks and floods disrupted activity. Fresh signs that China’s economic recovery is losing momentum followed news on Friday that U.S. consumer sentiment dropped sharply in early August to its lowest level in a decade. This backdrop weighed on world stocks and boosted demand for government bonds, which typically benefit from concerns about a weaker economic outlook. Germany’s benchmark 10-year Bund briefly dipped to -0.489% , its lowest in just over a week, before steadying at around -0.475% in thin summer trade. One worry for markets, said analysts, is that the U.S. Federal Reserve looks set to taper its asset purchase scheme just as a resurgent COVID-19 weighs on economic growth. In Europe, the European Central Bank is likely to announce long-awaited plans to reduce its pandemic-related asset purchases in the next quarter, a Reuters poll of economists showed. “The main topic is still the Delta variant as nobody knows how big the economic impact will be,” said DZ Bank interest rate analyst Sophia Oertmann. “In the U.S., the COVID numbers are rising again and so there is concern about this and whether if at the same time the Fed starts tapering.” Stronger-than-expected July U.S. jobs data and hawkish comments from some Federal Reserve officials have boosted talk of a Fed taper soon, although Friday’s weaker-than-expected U.S. sentiment data have pushed bond yields down. U.S. 10-year Treasury yields have fallen 8 basis points in the last two sessions, squeezing the gap with German Bund yields to around 170.60 bps on Monday - the tightest in over a week . U.S. 10-year Treasury yields also fell to their lowest in over a week on Monday and were last down 6 bps at around 1.24% . “The strengthening in U.S. Treasuries fed into a Gilts and Bund bid, although both remain pretty tightly wrapped in well-established ranges,” Mizuho analysts said in a note. “With the summer liquidity dearth, the market feels relatively low conviction in European rates.” (Reporting by Dhara Ranasinghe, additional reporting by Joice Alves; Editing by Catherine Evans) Our Standards: The Thomson Reuters Trust Principles.