LONDON, Sept 18 (Reuters) - Euro zone bond yields held

steady on Wednesday with investors cautious ahead of the

long-awaited Federal Reserve rate decision due later in the day,

which is likely to generate a significant market reaction.

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

the euro zone bloc, was little changed at 2.15%. It has

broadly been trending lower in recent months as rate cuts by

global central banks gather pace.

Moves on Wednesday were kept in check by the Federal Reserve

meeting, the outcome of which will be announced at 2 p.m. EDT

(1800 GMT). The Fed is all but certain to begin its rate cutting

cycle, though traders are uncertain about whether they will cut

rates by 25 or 50 basis points.

Markets currently see around a 60% chance that they will

start with a 50 bp move.

"Given the uncertainty that's still looming, we can expect a

decent market reaction whatever the decision is tonight," said

Jim Reid, global head of macro research at Deutsche Bank in a

morning note.

"You'd have to go back over 15 years to find such an

uncertain situation this close to the decision. A lot of money

will be made and lost today."

Italy's 10-year yield was higher by 1 bp at

3.51%, and the gap between Italian and German bunds

widened a touch to 136 bps.

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

sensitive to European Central Bank rate expectations, was flat

at 2.23%.