Nov 21 (Reuters) - Euro zone government bond yields

edged up as market participants assessed heightened tensions

between Russia and the West while waiting for purchasing manager

surveys (PMI), which could affect expectations for the European

Central Bank's policy easing path.

Russia had described a strike by U.S. missiles, which

Ukraine used to hit a target inside the country, as an

escalation in the 1,000-day-old war.

Germany's 2-year yield, which is more sensitive

to ECB policy rate expectations, rose one basis point (bp) to

2.13%. It hit 2.091% on Tuesday, its lowest since Oct. 24.

Markets priced in an ECB depo rate at 1.95% in July

while fully discounting a 25 bps cut in

December and a 20% chance of a 50 bps move.

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

euro area, was up one bp at 2.35%.

Italy's 10-year government bond yields, the

benchmark for the euro area periphery, rose 2 bps to 3.59%.

The yield spread between Italian and German yields - a gauge

of the premium investors demand to hold Italy's debt - was at

123 bps after reaching 115.90 on Tuesday, its tightest level

since mid-March 2024. Analyst expect a possible upgrade by

Moody's on Friday.

The gap between French and German yields was at 75 bps after

hitting 70.9, its tightest since Oct. 31.