(Updates at 1145 GMT)

By Alun John

LONDON, Nov 5 (Reuters) - Euro zone bond yields rose on

Tuesday, with all eyes on the U.S. election which could drive

significant volatility across global bond markets, as well as

other asset classes.

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

the euro zone bloc, rose 4 basis points to 2.43%, closing in on

last week's three-month high of 2.447%.

The German 2-year yield rose 2 bps to 2.31%.

Euro zone bond markets will close well before voting

concludes in Tuesday's U.S. presidential election, but there are

potentially sharp swings to come when trading begins on

Wednesday.

The MOVE index which tracks expected volatility in

U.S. Treasuries is at its highest in a year, a sign, say

analysts at ING, that "we can expect a lot more rates volatility

once the election outcome becomes clear".

Euro zone bonds have reacted to moves in the U.S. Treasury

market in recent months so will also be affected.

Opinion polls show the election race as virtually even and

the winner may not be known for days, though Republican

candidate former President Donald Trump has already signalled

that he will attempt to fight any defeat, as he did in 2020.

The benchmark U.S. 10-year Treasury yield was little changed

at 4.31%.

Market consensus ahead of the election is that a Trump

victory will lead to higher Treasury yields due to his policies

pushing inflation and growth higher likely causing a slower pace

of rate cuts from the Federal Reserve.

The picture in Europe is more complicated however.

On the one hand, euro zone bonds have moved broadly in line

with their U.S. equivalents this year, but, on the other, if

Trump were to impose the heavy tariffs he has threatened on

Europe, it could hurt economic growth and push the European

Central Bank to accelerate rate cuts, sending yields lower.

"For euro rates, we could see a broader risk-off move

dominating in the case of a Trump win, with flows towards

(German) Bunds and longer-duration bonds as a result," said the

ING analysts.

Politics in Germany, where the ruling three way coalition

faces a make-or-break week, is also complicating the picture for

markets, as is a rise in oil prices with Brent at a 10-day high

back above $75 a barrel.

Italy's 10-year bond yield, seen as the

benchmark for the European periphery, was 5 basis points higher

at 3.71%, leaving the gap between Italian and German 10-year

yields at 127 bps.