May 20 (Reuters) - Euro zone government bond yields rose

on Tuesday, tracking moves in U.S. Treasuries, as investors

worried about the U.S. debt load and remained on the lookout for

further trade deals from the world's biggest economy.

Germany's 10-year yield, the euro zone

benchmark, climbed 3 basis points to 2.61%.

Longer-dated Treasury yields rose on concerns that a U.S.

tax bill will increase the debt load, with the yield on

benchmark U.S. 10-year notes up 2 bps at 4.489%.

U.S. President Donald Trump will join the congressional

debate over his tax bill later on Tuesday, as Republicans who

control the House of Representatives struggle to keep their

fragile majority together for a crucial vote later this week.

"To me it's a long-term story, not a one-day story; we need

to price in higher-term premia into the U.S. curve," said Mohit

Kumar, chief European economist at Jefferies.

Term premium refers to the extra yield investors require for

owning longer-dated rather than shorter-dated bonds.

As a result, Kumar said he was recommending investors be

underweight on longer-dated U.S. Treasuries relative to

shorter-dated European government bonds.

However, markets were also selling short-dated German bonds

on Tuesday, with German two-year yields - more

sensitive to changes in expectations for European Central Bank

rates - up 2 bps at 1.85%.

Bond yields move inversely with prices.

In the euro zone, consumer confidence rose in May, while

German April producer prices recorded a 0.9% decline on the

year.

The ECB is on track to get inflation back to its 2% target,

but new challenges including around a global trade war may push

up prices further out, so the bank should stop easing policy,

ECB board member Isabel Schnabel said on Tuesday.

Money markets are pricing in an ECB deposit rate of 1.74% by

the end of 2025, with the next cut expected

to come in June.

Italy's 10-year yield was up 3 bps to 3.63%,

leaving the spread between Italian and German yields - a market

gauge of the risk premium investors demand to hold Italian debt

- at 99 bps.

European markets overlooked yields on long-dated Japanese

government bonds soaring to a record high on Tuesday, after a

poor auction result added to concerns about demand for the debt.