(Updates at 1005 GMT)

By Harry Robertson

LONDON, May 9 (Reuters) - Euro zone bond yields rose for

a second day on Thursday, retracing some of the recent fall

spurred by weaker-than-expected U.S. data, as traders waited for

the Bank of England's interest rate decision.

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

the euro zone bloc, rose 4 basis point to 2.5%. Yields move

inversely to prices.

The German 10-year yield had fallen for four straight

sessions until Wednesday, after nonfarm payrolls (NFP) data on

Friday showed the U.S. jobs market slowed in April, boosting

expectations that developed economy central banks will cut

interest rates.

"I do not think that today's sell-off is related to any

specific events or news," said Emmanouil Karimalis, European

rates strategist at UBS. "In my view, it is more of a

correction, following the strong rally after the NFPs."

The Bank of England is widely expected to hold rates at

5.25% at 1100 GMT (1300 CET), but investors will be looking out

for hints about whether borrowing costs are likely to fall in

the coming months.

Sweden's Riksbank cut rates on Wednesday in a sign that

Europe's central banks are prepared to diverge from the U.S.

Federal Reserve, which is expected to hold rates until September

or November.

Traders expect the European Central Bank to lower rates in

June, according to money market pricing, with inflation running

at 2.4% in April and growth tepid.

"The ECB looks ready to cut its policy rate in June, but

uncertainty in the U.S. keeps (bond market) rates under

pressure," said Karimalis.

Italy's 10-year yield was 6 bps higher at

3.855%, and the gap between Italian and German yields

widened 2 bps to 135 bps.

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

sensitive to European Central Bank rate expectations, was up 2

bps at 2.95%.

On Wednesday, Austrian central bank Governor Robert

Holzmann, who typically favours higher interest rates, said he

sees "no reason...to cut key interest rates too quickly, too

strongly".

He added that the ECB would be influenced by the Fed, given

the importance of the dollar in the global financial system.

Data on Thursday showed that China's exports and imports

returned to growth in April after contracting in the previous

month.

In the first quarter, the United States overtook China as

Germany's most important trading partner, according to Reuters'

calculations.