Sept 20 (Reuters) - Euro zone government bond yields

edged up on Friday as investors shifted their focus to economic

data next week after pricing the outcome of the Federal Reserve

policy meeting.

Risky assets rallied after the Fed as investors expected

rates to fall further and the U.S. central bank to be close to

winning its battle against inflation while engineering a soft

landing for the U.S. economy.

Yields move inversely with prices.

German 10-year yields were up 0.5 basis points

(bps) at 2.20%, and it was about to end the week 4.5 bps higher.

"After days of agonising over whether the Fed will deliver

either a 25 bps or a 50 bps cut, the market can finally move

back to looking at macro fundamentals and incorporating the

different levels of exuberance central banks are showing towards

policy easing," said Rohan Khanna, head of the euro rate

strategy at Barclays.

September flash PMIs on Monday will be a crucial reality

check on the region's growth momentum, which has recently

disappointed expectations.

The Olympics-driven boost to French PMIs in August lifted

the overall headline PMI, and markets expect some give-back.

Later next week, flash inflation releases for France and

Spain are due before the German and euro area print the

following week.

"We doubt the Fed will make ECB, Norges Bank or the Bank of

England move faster," said Ruben Segura Cauyela, European

economist at BofA.

Money markets fully price a 25 bps rate cut by the European

Central Bank in December and an around 25% chance of a further

move by year-end.

France's government bonds recently underperformed their

peers, with its yields dropping 0.5 bps to 2.91% on

Friday after rising 9 bps this week.

The yield spread between French and German Bunds - a gauge

of risk premium investors demand to hold French government debt

- widened to 73.5 bps. It hit 74.80 bps on Thursday, its highest

level since mid-August. It rose above 80 bps during the French

elections.

France appeared on the cusp of a new government on Thursday

that is likely to have to administer a politically toxic round

of spending cuts or tax hikes to improve the country's fiscal

mess.

The five-year forward inflation swap- a key market gauge of

euro area long-term inflation expectations- was at 2.06% after

hovering above the 2% level since early September. It hit a

26-month low at around 2.03% on Sept. 11.

Germany's 2-year Schatz yields were up 2.4 bps at

2.159.

Italian 10-year yields fell 1.5 bps to 3.54 and

are about to end the week 4 bps higher. The yield spread with

Bunds was at 135 bps.