Oct 16 (Reuters) - The euro zone's benchmark Bund yields

hit a more than one-week low on Wednesday ahead of a widely

expected interest rate cut from the European Central Bank this

week.

Germany's 10-year bond yield fell nearly 4 basis

points to 2.191%, its lowest since Oct. 4. Bond yields move

inversely to prices.

Euro zone bonds rallied as a slide in oil prices stoked

inflationary worries. Money markets are fully pricing in a

quarter-point rate cut from the ECB on Thursday with traders

split between another move before the end of the year.

Germany's two-year bond yield, which is more

sensitive to European Central Bank rate expectations, slipped 3

basis points to 2.183%.

Focus is also on Germany's 30-year debt auction where the

government will raise 2 billion euros, according to UniCredit.

Italy's 10-year yield was lower by 2 basis

points at 3.45%, and the gap between Italian and German bunds

widened 0.9 basis points to 124.9.

The spread between U.S. 10-year Treasuries and German bunds

widened 0.2 basis points to 181.43 bps.