(Changes throughout. Adds comment.)

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Fed Chair Powell due to speak at Jackson Hole on Friday

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Money markets price in quarter-point Fed rate cut

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Anticipate ECB will hold rates steady

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Spread between French and Italian 10-year yield narrows

By Joice Alves

LONDON, Aug 20 (Reuters) - Euro zone government bond

yields were little changed on Wednesday as traders awaited the

outcome of a symposium of global central bankers later in the

week for further indications on possible rate cuts.

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

benchmark, was down 2.6 basis points at 2.728%. It hit a 4-1/2

month high of 2.787% on Monday. Yields move inversely with

prices.

This week, euro zone bond yields have been in a holding pattern

ahead of an annual symposium of global central bankers in

Jackson Hole, Wyoming, and after talks in Washington on ending

Russia's war in Ukraine.

The focus will be on what Federal Reserve Chair Jerome

Powell will say on Friday about the near-term outlook for rates.

"We have (seen) this very large move higher in yield, and I

think everyone is sort of now waiting and looking for what

Powell will say in Jackson Hole," said Evelyne Gomez-Liechti,

Multi-Asset Strategist, at Mizuho International.

She expected Powell to continue to stress the wait-and-see mode

as jobless claims in the U.S. were stable and unemployment has

risen only moderately, while service inflation has picked up.

"I do think that Powell will sound a bit more patient and a

bit more hawkish versus what other Fed members have been

talking," she said.

The importance of the U.S. economy means changes in Fed rate

expectations often influence other bond markets.

Money markets are almost fully pricing in a quarter-point

rate cut at the Fed September 16-17 meeting. The Fed policy rate

has been in the 4.25%-4.50% range since December.

In the meantime, futures point to the European Central Bank

holding interest rates at 2% at its September meeting.

FRANCE'S POLITICAL STORY

The spread between Italy's 10-year bond yield and its French

equivalent was also under focus. It has narrowed to levels last

seen two decades ago as France faces political instability and

heads to discuss its budget. The spread was last at around 13.5

bps.

"For me, France is a political story," Gomez-Liechti said.

"Prime Minister [François] Bayrou is very ambitious in his wish

to consolidate fiscally speaking. But I think his ideas are not

going to go down very well with either the left or the right. So

I think there is risk of some sort of no confidence motion

coming through".

France's 10-year yield was unchanged at 3.428%,

having hit a four-month high of 3.468% on Monday.

Italy's 10-year bond yield was 2 bps lower at

3.565%, keeping the spread between Italian and German 10-year

yields at 83 bps.

Elsewhere, data showed on Wednesday that UK inflation rose to

the highest since early 2024 at 3.8%.

In the euro zone, the final reading confirmed July inflation at

2.0%.