(Updates at 1415 GMT)

By Harry Robertson

LONDON, Sept 6 (Reuters) - Euro zone government bond

yields bounced around on Friday on the back of U.S. data and

comments from a Federal Reserve official, but were on track to

end the week lower.

Bond yields fell in the morning as investors awaited the

key August non-farm payrolls report,

which showed the economy added 142,000 jobs in August,

compared with a downwardly revised 89,000 in July and below the

160,000 economists expected. The U.S. unemployment rate ticked

down to 4.2%, from 4.3% in July.

Germany's benchmark 10-year bond yield was last

down 1 basis point (bp) at 2.196%, and was set to end the week 9

bps lower.

It earlier fell to 2.147%, its lowest since weak July

U.S. jobs data sparked a stock-market sell-off and rally in

bonds in early August. Yields move inversely to prices.

"The August U.S. labour market report painted something of a

mixed picture of the employment situation," Michael Brown,

senior research strategist at Pepperstone, said.

"All of this does little to clear up the debate over the

(size of the rate cut) at the September Fed meeting."

Federal Reserve Bank of New York President John Williams

said on Friday that a better balanced economy has opened the

door to cutting rates, but his speech suggested he does not feel

pressure to rapidly slash borrowing costs.

Data this week has suggested the all-important U.S. economy

is cooling, with job openings, private payroll growth, and

manufacturing activity all falling, helping pull down global

bond yields as investors position for rate cuts.

The Fed is seen as almost certain to lower borrowing costs

later this month, although the market is split on whether it

will be a 25 or 50-bp reduction.

Italy's 10-year yield fell to its lowest since

December at 3.506% but was last down 1 bp at 3.56%.

The size of the U.S. economy and importance of the dollar

means American data has an outsized influence on markets and

central banks around the world.

European data showed that German industrial orders dropped

2.4% in July, a much bigger fall than expected. Second quarter

euro zone growth was also downgraded.

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

sensitive to European Central Bank rate expectations, was last

down 4 bps at 2.26% after earlier falling to 2.223%, the lowest

since Aug. 5.

The European Central Bank meets next week and is widely

expected to cut rates by 25 bps to 3.5%, although the outlook

beyond that is less clear.

Money market pricing shows traders currently expect around

64 bps of cuts between now and 2025, up from around 59 bps at

the start of the week.