Aug 12 (Reuters) - Euro zone government bond yields

edged higher on Monday after a volatile week of trading on

worries around the U.S. economy, as investors awaited U.S.

inflation data to gauge the extent of interest rate cuts by the

Federal Reserve this year.

The German 10-year bond yield, the benchmark for

the euro zone bloc, rose 2.5 basis points to 2.247%. It had sunk

to a seven-month low of 2.074% on last Monday.

Euro zone bond yields have recovered from multi-month lows

hit last week when worries about slowing U.S. jobs growth, an

unravelling of Japanese yen-funded trades and disappointing

earnings among large tech firms sent investors scurrying to the

perceived safety of bonds.

Investors will focus on U.S. consumer prices data on

Wednesday, with softer-than-expected numbers likely to spark

chatter of a bigger 50-basis-point (bps) rate cut by the Fed in

September. Odds for such a move stand currently at 47%, as per

CMEGroup's Fedwatch tool.

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

sensitive to European Central Bank rate expectations, rose 2.9

bps at 2.41%.

Italy's 10-year yield was higher by 2 bps at

3.655%, and the gap between Italian and German bunds

narrowed 3 basis points to 141 bps.