Sept 30 (Reuters) - Euro zone government bond yields

edged higher on Monday after German inflation data led investors

to slightly scale back their bets on future European Central

Bank monetary easing moves.

Germany's 10-year bond yield, the benchmark for

the euro zone bloc, rose 2 basis points (bps) to 2.16%; it was

down 0.5 bps before the German figures.

Inflation eased across a raft of key German states in

September, preliminary data showed on Monday, suggesting that

the national inflation rate would also decrease further.

Markets priced in a 50 bps of rate cuts by the European

Central Bank by year-end from around 53 bps

before data.

Data showed on Friday that French and Spanish consumer

prices rose less than anticipated in September, leading

investors to increase their bets on future ECB rate cuts.

Figures from the euro area are due on Tuesday.

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

to ECB rate expectations, was up 2 bps at 2.3%. Earlier in the

session it hit 2.046%, its lowest level since December, 2022.

The gap between Austrian and German 10-year yields

- a gauge of the risk premium investors demand to

hold Austria's government bonds - was roughly unchanged at 49.5

bps, after the far-right won the parliamentary elections.

The Eurosceptic, Russia-friendly Freedom Party (FPO) gained

28.8% of the vote, but Leaders of Austrian political parties

united to reject the idea of forming a coalition with FPO.

Italy's 10-year yield rose 3.5 bps to 3.49%, and

the gap between Italian and German yields widened

to 132 bps.