March 28 (Reuters) - Euro zone bond yields edged up on

Thursday after Federal Reserve Governor Christopher Waller

advocated a higher-for-longer rate strategy in cautious markets

ahead of key inflation data, which could affect the central

banks' policy path.

** Waller said it was prudent to hold rates at the current

restrictive levels for longer to help keep inflation on a

sustainable trajectory toward 2%.

** Belgium will issue inflation figures later in the

session, France, Italy and the U.S. on Friday, while German and

euro area-wide figures are due next week.

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

for the bloc, was up 1.5 basis points (bps) at 2.31%, after

hitting 2.292% late on Wednesday, its lowest since March 12.

** Markets fully priced in a 25 bps ECB rate cut by June and

around 90 bps by year-end.

** Italy's 10-year bond yield was 3.5 bps higher at 3.65%

, with the closely watched gap to Germany's 10-year

yield at 132 bps.

** Germany's 2-year bond yield, which is more

sensitive to European Central Bank rate expectations, rose 2.5

bps to 2.83%.