Dec 17 (Reuters) - Euro zone government bond yields held

largely steady on Tuesday, as markets readied for the U.S.

Federal Reserve meeting on Wednesday, where the central bank is

expected to cut interest rates but signal a measured pace of

easing ahead.

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

the euro zone bloc, was up less than 1 basis point (bp) at

2.25%.

Italy's 10-year yield was up 2 bps at 3.416%,

its highest level since Nov. 27, while the gap between Italian

and German bond yields held steady at 115.7 bps.

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

to European Central Bank rate expectations, was little changed

at 2.05%.

Traders price in a 25-basis-point cut from the Fed on

Wednesday, but then expect the central bank to signal a slower

pace for cuts in 2025.

The gap between French and German yields -

seen as a gauge of the extra return investors demand to hold

France's debt - was little changed at 80.2 bps.

The spread reached its widest in around two weeks on Monday,

after credit ratings agency Moody's unexpectedly downgraded

France's rating on Friday.