LONDON, May 9 (Reuters) - Euro zone government bond

yields slightly pared their earlier gains after the Bank of

England left rates unchanged but took another step towards

easing its monetary policy.

The BoE said its Monetary Policy Committee voted 7-2 to keep

rates at a 16-year high of 5.25%, and Governor Andrew Bailey

said he was "optimistic that things are moving in the right

direction". It was widely expected to hold rates at 5.25%.

Euro zone bond borrowing costs rose for a second day on

Thursday, retracing some of the recent fall spurred by

weaker-than-expected U.S. data.

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

the euro zone bloc, rose 3 basis points (bps) to 2.50%. Yields

move inversely to prices. It was up 4 bps before the BoE.

The German 10-year yield had fallen for four straight

sessions until Wednesday, after nonfarm payrolls (NFP) data on

Friday showed the U.S. jobs market slowed in April, boosting

expectations that developed economy central banks will cut

interest rates.

"I do not think that today's sell-off is related to any

specific events or news," said Emmanouil Karimalis, European

rates strategist at UBS. "In my view, it is more of a

correction, following the strong rally after the NFPs."

Sweden's Riksbank cut rates on Wednesday in a sign that

Europe's central banks are prepared to diverge from the U.S.

Federal Reserve, which is expected to hold rates until September

or November.

Traders expect the European Central Bank to lower rates in

June, according to money market pricing, with inflation running

at 2.4% in April and growth tepid.

Italy's 10-year yield was 4.5 bps higher at

3.84%, and the gap between Italian and German yields

widened 2 bps to 135 bps.

On Wednesday, Austrian central bank Governor Robert

Holzmann, who typically favours higher interest rates, said he

sees "no reason...to cut key interest rates too quickly, too

strongly".

He added that the ECB would be influenced by the Fed, given

the importance of the dollar in the global financial system.

Data on Thursday showed that China's exports and imports

returned to growth in April after contracting in the previous

month.

In the first quarter, the United States overtook China as

Germany's most important trading partner, according to Reuters'

calculations.