Oct 24 (Reuters) - Euro zone government bond yields

briefly ticked down after economic data showed U.S. consumer

prices increased slightly less than expected in September.

The U.S. economic figures kept the Federal Reserve on track to

cut interest rates again next week and affected marginally bets

on the European Central Bank rate outlook.

Euro area government bond yields rose on Friday after

stronger-than-expected Purchasing Managers' Index readings from

the single-currency bloc prompted investors to slightly scale

back bets on a European Central Bank rate cut next year.

Germany's 10-year Bund yields were last up 3 basis points

(bps) at 2.61%.

Money markets priced in a 55% chance of a 25 bp ECB rate cut

by July from 50% before the U.S. data. The

key rate is seen at about 1.85% in December 2026 from the

current 2%.

Germany's 2-year yields, more sensitive to ECB

policy expectations, were 3 bps higher at 1.96%, after hitting a

2-week high of 1.98%.

Borrowing costs on both sides of the Atlantic rose on Thursday

after U.S. sanctions on Russia prompted a jump in oil prices,

stoking inflation concerns.

Benchmark U.S. Treasury 10-year yields dropped 1.5

bps to 3.97%, after rising 3.5 bps the day before.