LONDON, March 22 (Reuters) - Euro zone bond yields fell

on Friday and were on their way to a weekly decline, after

central banks reassured investors that interest rate cuts in

several markets are likely to come in the summer.

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

down 7 basis points (bps) at 2.326%. It was on track for a

weekly fall of 11 bps, and was trading around its lowest in a

week.

Yields have been rising for much of 2024 as resilient

economic data, particularly in the United States, has caused

traders to push back expectations of substantial interest rate

cuts until the middle of 2024.

But several central bank meetings this week saw markets

became more confident that cuts would at least come by the

middle of the year.

"A lot has happened, there have been a lot of central bank

meetings, but if you take a step back we are much closer to the

point where central banks want to and are going to start

cutting, and we have had the first cut from the Swiss central

bank," said Jamie Niven, senior fixed income fund manager at

asset manager Candriam.

The Federal Reserve on Wednesday kept rates steady but

reiterated its projection that it would cut interest rates by 75

bps by the end of the year, then on Thursday the Bank of England

said the economy was heading in the right direction for cuts.

In Switzerland, where inflation is lower, the Swiss National

Bank surprised markets by reducing borrowing costs 25 bps.

Italy's 10-year yield was last down 3 bps at

3.637% and set for a weekly fall of 6 bps.

The closely watched spread between German and Italian yields

was at 130 bps, up from a more than two year low

on of 115 bps last Thursday.

Bonds rose further in the afternoon session, pushing yields

lower, although there was little in the way of data to excite

markets.

"The moves seem typical of an end-of-quarter risk-off tone

driven by portfolio rebalancing or deleveraging," said Michiel

Tukker, rates strategist at ING.

"Such moves can be frontloaded a week in advance, and we saw

a similar picture on the last Friday in February."

Markets see a roughly 85% chance that the European Central

Bank and Federal Reserve will cut rates by their June meetings.

Bundesbank President Joachim Nagel on Friday added his name

to a long list of policymakers suggesting that June was the

date, saying the ECB might be in a position to cut interest

rates before the summer recess.

Markets were also digesting a survey released on Friday

showing German business morale improved in March and beat

expectations.

Rate sensitive shorter-dated bond yields were also set for

weekly declines, Germany's two-year yield down 5 bps

at 2.806% and set for a weekly drop of 10 bps.