Sept 8 (Reuters) - Euro zone government bond yields

edged higher on Monday, recovering from Friday's drop, after

U.S. data boosted bets on Federal Reserve rate cuts.

Investors are now awaiting a confidence vote in the French

parliament, though markets expect only a muted reaction to the

likely collapse of the government.

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

the euro zone bloc, rose 1 basis point (bp) to 2.67%. It hit

2.80% last week, its highest level since March 26.

The benchmark 10-year U.S. Treasury yield was

roughly unchanged at 4.09% in early London trade, after slumping

on Friday.

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

French government bonds (OATs) - a market gauge of

the risk premium investors demand to hold French debt - was at

78 bps after reaching 82 bps last week.

"OATs are largely priced for the collapse of Bayrou

government at the confidence vote today and a compromise deal

avoiding a snap election," Citi said.

Yields on 30-year German bonds were flat at

3.30%. They reached 3.434% early last week, their highest level

since summer 2011.

Ultra-long borrowing costs rose as investors expected

Germany's investment plans, along with likely increases in

defence spending across euro area countries, to push up debt.

France's 30-year bond yield was down 1 bp at

4.37%. It hit last week 4.523%, its highest since June 2009.

Germany's 2-year yields, more sensitive to

expectations for European Central Bank policy rates, rose 1 bp

to 1.94%.