LONDON, Oct 7 (Reuters) - Euro zone government bond

yields inched higher on Monday after rising sharply at the end

of last week following stronger-than-forecast U.S. labour market

data, suggesting that the Federal Reserve could slow its pace of

easing.

Germany's 10-year yield, the euro area

benchmark, was up 1 bp at 2.227%.

The U.S. added 254,000 non farm payrolls in September, well

above expectations in a Reuters survey of economists. The

unemployment rate dropped to 4.1%.

"The payroll report should put to rest any expectations of a

50bp cut in November," said Mohit Kumar, an economist at

Jefferies.

Futures markets almost fully wiped out the chances of

another 50 bp rate cut from the Fed at the meeting next month -

which stood at around a one-in-three chance before the data -

with markets seeing a 25 bp rate cut as the most likely outcome.

The size and importance of the U.S. economy means U.S.

economic data tends to impact bond markets and central banks

globally.

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

changes in monetary policy expectations, was up 1 bp at 2.217%.

It jumped over 13 bps on Friday, its biggest one-day rise since

April, 2023.

Italy's 10-year yield was up 1 bp at 3.529%,

with the gap between Italian and German 10-year yields

steady at 129 bps.