(Updates at 0900 GMT)

By Greta Rosen Fondahn

Dec 19 (Reuters) - Euro zone bond yields jumped on

Thursday, a day after the U.S. Federal Reserve cut interest

rates as expected but signalled it would slow the pace of easing

in 2025.

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

the euro zone bloc, rose 5 basis points (bps) to 2.284%,

touching its highest level since Nov. 22. Yields move inversely

to prices.

Italy's 10-year yield rose to its highest since

Nov. 26, and was last up 7 bps at 3.467%.

The gap between Italian and German bond yields

widened 4 basis points to 118 bps.

The Fed cut interest rates by 25 bps as expected on

Wednesday, but Chair Jerome Powell said more reductions in

borrowing costs now hinge on further progress in lowering

inflation.

Powell said the decision to lower the policy rate to the

4.25%-4.50% range this time was a "closer call" than implied by

financial markets that considered the cut a near certainty ahead

of the meeting.

At the same time, markets are already eyeing the prospects

for sweeping economic changes under a Trump administration and

the impact that could have on inflation.

"A bit more hawkish Fed than anticipated, but still a lot up

in the air because there is still dependency on what exactly

Trump does," Lyn Graham-Taylor, a senior rates strategist at

Rabobank, said.

Money markets now price in just 34 bps in easing from the

Fed in 2025.

The Fed strongly influences the U.S. government bond market,

which sets the tone for borrowing costs around the world.

U.S. Treasury yields surged on Wednesday, with the 10-year

yield rising to its highest level since late May

after the rate decision. The 10-year yield was up 2 bps at

4.518% on Thursday.

The spread between U.S. 10-year Treasuries and German bunds

narrowed 3 basis points to 223 bps.

Germany's two-year bond yield, sensitive to

European Central Bank rate expectations, rose 1 bp to 2.05%.

Earlier on Thursday, the Bank of Japan held interest rates

steady. The Bank of England is expected to do the same later in

the day.

(Reporting by Greta Rosen Fondahn; Editing by Peter Graff and

Subhranshu Sahu)