Oct 14 (Reuters) - Euro zone government bond yields hit

fresh multi-week lows on Tuesday, as investors kept a close eye

on U.S.-China trade tensions and France's ongoing political

stalemate.

Investors fretted over the potential economic fallout from

uncertainty following commercial disputes, which could cloud

corporate decision-making and delay investment planning.

However, U.S. President Donald Trump remained on track to

meet Chinese leader Xi Jinping in South Korea in late October as

both sides looked to ease tensions following fresh tariff

threats and export controls.

French Prime Minister Sebastien Lecornu faces two possible

no-confidence votes, and it was unclear if he had the votes to

survive to the end of the week.

Germany's 10-year Bund yields, the bloc's benchmark, fell 3

basis points (bps) to 2.60%, after hitting 2.597%, its lowest

since July 23.

U.S. Treasury yields fell in early London trading with the

10-year down 3 bps at 4.02%. The U.S. bond market

was closed on Monday for Columbus Day.

Germany's 2-year yields, more sensitive to

expectations for European Central Bank policy rates, dropped 2

bps to 1.92%.

Money markets priced in about a 70% chance of a

25-basis-point European Central Bank rate cut by July

, up from around 65% the day before. The ECB

depo rate is seen at 1.90% in February 2027

from the current 2%.

The yield gap between safe-haven Bunds and 10-year French

government bonds - a market gauge of the risk

premium investors demand to hold French debt - was at 83.50 bps.

It hit 87.96 bps, the highest since January 13 on concerns about

the French fiscal outlook.

France 10-year yields were down 2 bps at 3.444%,

their lowest since September 8.

Investors see no clear catalyst for further widening in

French spreads in the absence of new elections.