LONDON, April 3 (Reuters) - Euro zone bond yields were

little changed on Wednesday as data showed inflation in the

currency bloc cooled in March, leaving in place investors'

expectations that the European Central Bank will lower interest

rates in June.

Data showed

inflation came in at 2.4% year-on-year in March, after 2.6%

in February. Economists polled by Reuters had expected the rate

to stay at 2.6%, although individual country releases in the

preceding days pointed to a slightly lower number.

Germany's 10-year bond yield, the euro zone

benchmark, was last down 2 basis points (bps) at 2.388%, roughly

where it traded before the figures were released. Yields move

inversely to prices.

"We already got the data from the big countries in the

past few days so it was pretty clear what the euro zone number

would look like, so it was in that sense already discounted,"

said Jussi Hiljanen, head of rates strategy at SEB.

"When it comes to next week's ECB meeting... probably

they're quite happy with market pricing and there's not any

compelling reason to try to steer markets in any particular

direction. So next week's meeting in that sense could be a

non-event."

Investors continue to see a rate cut by June as a near

certainty, according to money market pricing.

Longer-dated yields have risen in recent days as U.S.

economic data has come in stronger than expected, causing

investors to cut their bets on deep interest rate cuts from the

Federal Reserve this year.

Given the importance of the U.S. economy and the similar

path of inflation across the two economic zones, euro zone bonds

tend to track their American peers.

Italy's 10-year bond yield has risen more

than Germany's in recent days after outperforming in the first

quarter, and was last up 3 bps at 3.833%.

The closely watched gap between Italian and German

10-year yields stood at 143 bps, a one-month high, up from a

more than two-year low of 115 bps in mid-March.

Germany's two-year bond yield was 1 bp lower

at 2.802%. The yield is sensitive to European Central Bank

interest rate expectations and has risen 39 bps this year.

Investors were also waiting for more U.S. data on

Wednesday, including the ISM services sector survey and an

estimate of private job growth in March.

The ISM

manufacturing survey

came in stronger than expected on Monday, sparking a

sell-off in U.S. bonds as investors reconsidered their

expectations for a Fed cut in June. Euro zone bonds followed

suit on Tuesday, with Germany's 10-year yield rising 12 bps.

Friday's March U.S. employment numbers, also known as

nonfarm payrolls, are the key data point for markets this week.