LONDON, April 3 (Reuters) - Euro zone bond yields fell

slightly on Wednesday, after rising sharply the previous day, as

investors waited for March inflation data for the bloc.

** Germany's 10-year bond yield, the euro zone

benchmark, was last down 3 basis points (bps) at 2.382%. Yields

move inversely to prices.

** The yield rose 12 bps on Tuesday, catching up after a holiday

with a sharp rise in U.S. yields on Monday, which was driven by

stronger-than-expected survey data.

** Data due at 0900 GMT (1100 CEST) is expected to show

inflation held steady at 2.6% year-on-year in March, although

some economists think Tuesday's soft regional price data means

the figure could come in lower.

** Germany's two-year bond yield was little changed

at 2.811%. The yield is sensitive to European Central Bank

interest rate expectations and has risen 39 bps this year.

** Italy's 10-year bond yield was down 3 bps at

3.777%. The closely watched gap between Italian and German

10-year yields stood at 138 bps, up from a more than two-year

low of 115 bps in mid-March.