(Updates for European afternoon trading)

By Lucy Raitano

LONDON, July 7 (Reuters) - Euro zone bond yields rose on

Monday as markets focused on developments around U.S. tariffs,

with officials flagging a delay to a July 9 deadline, although

specifics on the changes remained murky.

U.S. Treasury Secretary Scott Bessent said the United States

will make several announcements on trade in the next 48 hours,

as the 90-day tariff pause comes to an end.

His comments echoed those of President Donald Trump, who

said the U.S. was close to finalising trade deals and would

notify other countries of higher tariff rates by July 9.

"Today is all about what Trump does in terms of his

tariffs," said Mohit Kumar, chief financial economist for Europe

at Jefferies.

"Where euro zone markets are concerned, the key question is:

is Europe going to be part of that list or not?," said Kumar,

whose base case is that the region will not feature, though he

thinks Japan might be included.

Germany's benchmark 10-year Bund yield rose 3.5

basis points (bps) to 2.601%, largely in line with moves in

10-year U.S. Treasuries.

Whatever the outcome, markets have braced for heightened

volatility this week ahead of the deadline, with more concrete

details on Trump's plans for import tariffs with the United

States' major trading partners set to become clear.

Italy's 10-year yield rose 5 bps to 3.522%, with

the premium over German Bunds at about 92 bps,

according to LSEG data.

Outside the euro zone, Britain's 10-year gilt yield

was up 2 bps at 4.57%, remaining elevated following

a sharp sell-off in UK government bonds last Wednesday, which

was spurred by a U-turn on planned government cuts to welfare

spending.

Elsewhere, German industrial production rose more than

expected in May thanks to the automotive industry and energy

production, the federal statistics office said on Monday.

Investor sentiment in the euro zone improved more than

expected in July to hit its highest level in more than three

years, a survey showed on Monday, as the bloc's economic

recovery broadened.

Markets are currently placing a more than 90% chance of

no change at the European Central Bank's next policy

announcement on July 23, after 200 bps worth of rate cuts since

the middle of last year.

"The ECB is in a fantastic place, in the sense that rates

are neutral, inflation is going to 2%, growth is fine - it's not

great - but we're far from recession level," said Kumar.

"They can really afford to just wait and watch," he said.

Germany's two-year yield, typically more

sensitive to shifts in interest rate expectations, was up by 2.5

bps at 1.843% but remained close to a three-week low of 1.799%

touched on Friday.