Oct 20 (Reuters) - Euro zone benchmark Bund yields rose

on Monday as investor anxiety over U.S.-China trade tensions and

the health of U.S. regional banks eased, slowing the recent

flight into safe-haven assets.

Benchmark Bund yields recorded their fourth straight weekly drop

on Friday.

Market participants are closely watching Wall Street futures,

which were up 0.34% in early London trade, after indexes

ended higher on Friday.

Germany's 10-year Bund yields were up 0.5 basis points at

2.58%. They hit 2.523% on Friday, their lowest since June 25.

They ended the week 5.5 basis points lower.

Money markets ramped up bets on European Central Bank rate

cuts last week, amid concerns that trade tensions and credit

stress could weigh on economic growth.

They priced in about a 70% chance of a 25-basis-point ECB

rate cut by July, up from around 70% on

Friday. The key rate is seen at 1.83% in December 2026

from the current 2%.

Germany's 2-year yields, more sensitive to

expectations for ECB policy rate outlook, rose 0.5 bps to 1.92%.

The yield gap between safe-haven Bunds and 10-year French

government bonds - a market gauge of the risk

premium investors demand to hold French debt - widened to 78.50.

It hit 87.96 bps earlier this month, the highest level since

January 13, on concerns about the French fiscal outlook but fell

to below 75 bps after Prime Minister Sebastien Lecornu survived

two no-confidence votes in parliament on Thursday.