Nov 19 (Reuters) - Euro zone 10-year yields held near

multi-week highs on Wednesday as investors eyed stock markets,

where a fresh selloff could trigger a rush into government

bonds.

European shares hovered near a more than one-month low as

tech valuation concerns kept investors cautious ahead of a

high-stakes earnings report from AI poster-child

Nvidia.

U.S. stock index futures were slightly higher.

Germany's 10-year yields, the euro area's

benchmark, were flat at 2.71% after hitting 2.718% early this

week, their highest since October 7.

ING analyst said the gap between Bund yields and asset swap

rates indicates that the recent risk-off move has boosted demand

for German government bonds.

"Over in Europe, the 10-year swap rate at 2.75% still looks

relatively high in its range since Germany made its spending

announcement," said Benjamin Schroeder, rate strategist at ING.

"However, we have seen Bunds trade gradually richer over the

past days with 10-year yields now standing 5 bps below the swap

rate," he said, adding such moves mirrored rising hedging demand

in equity markets.

The Bund asset swap spread was last at -4 basis points

(bps), from zero on November 11.

Meanwhile, euro area inflation figures released by Eurostat

met analyst expectations.

Benchmark 10-year U.S. Treasuries yields were up

2.5 bps to 4.56% after dropping the day before as falling stock

markets boosted demand for the safe-haven bonds, while markets

kept pricing around a 50% chance of a Fed rate cut next month.

Traders priced in about a 30% chance of a 25-basis-point

move by September while they expected the

key rate to be at 1.95% in December 2026 from the current 2%.

Germany's 2-year yields, more sensitive to

expectations for the ECB policy rate outlook, fell 0.5 bps to

2.02%. They hit 2.051% early this week, their highest level

since March 28.

Italy's 10-year government bond yields were down

one bp at 3.45%, after hitting 3.474% on Monday, their highest

level since October 13.

The gap over safe-haven German Bunds - a key

gauge of the extra return investors demand to hold Italian debt

instead of German bonds - was at 75 bps, after hitting a fresh

15-year low at 70.68 bps.

Citi warned in its morning note that the resilience of euro

area government bond spreads "might be at risk" if risk-off

sentiment in financial markets persists.