(Updates at 1140 GMT)

By Alun John

LONDON, Nov 8 (Reuters) - Euro zone bond yields moved

lower on Friday, at the end of a busy period in which they had

to digest major central bank meetings, the U.S. election and the

collapse of the German government, and which has left them near

flat on the week.

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

euro zone, was last down 5 basis points at 2.39%, after a

volatile few days as investors try to assess the ramifications

of recent developments.

The election of Donald Trump as U.S. president initially

caused a sharp rise in U.S. Treasury yields, on the one hand

potentially putting upward pressure on European yields, which

often move in sympathy with their U.S. peers, but, on the other,

potentially pushing euro zone yields down on expectations U.S.

tariffs on Europe could see a faster pace of ECB rate cuts.

Also in the mix has been the collapse of the German

government, and pressure for an early election.

This could drive investors to German government bonds given

their safe haven status and push yields down, or, alternatively,

if a new government is able to increase spending and boost

economic growth, it could send yields higher.

"There are a lot of dynamics all playing at the same time,"

said Michiel Tukker, senior European rate strategist at ING.

"Just looking at today, we see again that the correlation

is quite strong between U.S. Treasury yields and Euro rates,

which are both down."

The benchmark 10-year Treasury yield was down 4 bps at

4.31%, now well below a four-month high of 4.479%

hit on Wednesday in the aftermath of the U.S. election result.

That rise came as traders bet the tax cut and tariff

policies of a second Donald Trump presidency would boost

economic growth and inflation, cause the Fed to cut rates by

less than they otherwise would, and potentially even raise fears

about the sustainability of the U.S. fiscal position.

"Maybe we are going back to thinking about macro data.

Friday's payrolls data was disappointing and so we might need to

reconsider whether in the short term we might see some

disappointing numbers and lower yields before Trump starts

ramping up," said Tukker.

U.S. job growth almost stalled in October as strikes in the

aerospace industry depressed manufacturing employment,while

hurricanes shortened the collection period for payrolls, making

it hard to get a clear picture of the labour market.

Eyes were also on the Germany's 10-year swap spread

which on Thursday hit -6.70 bps, its lowest

level since at least 2003, according to LSEG data.

It has been falling sharply in recent months on a range of

factors including expectations for substantial European Central

Bank rate cuts and the implications of the ECB reducing its

balance sheet.

But the spread rebounded a touch on Friday and was last at

-2.40 bps.

Elsewhere, the German two year yield was 2 bps lower at

2.20% and Italy's 10 year yield was 5 bps lower at 3.69%, to

leave the gap between German and Italian 10 year yields at 129

bps.