(Updates at 1500 GMT)

By Harry Robertson

LONDON, May 21 (Reuters) - Euro zone bond yields were

slightly lower but within their recent range on Tuesday as

investors waited for wage and survey-based growth data later in

the week to provide more clues on the path of interest rates.

The German 10-year bond yield, the benchmark for

the euro zone bloc, fell 2.5 basis points (bps) to 2.508%.

The yield, which moves inversely to the price, has risen

from a one-month low of 2.398% touched last week as central

bankers have said they remain cautious about cutting interest

rates.

A key focus for European investors this week is the release

of first quarter negotiated wage figures for the euro zone on

Thursday.

European Central Bank officials have long said they need to

see slower increases in wages to be confident that inflation in

the bloc is on a sustainable downward path.

A closely watched survey-based gauge of the private sector -

the purchasing managers' index (PMI) - will be released on

Thursday and is expected to show growth continued in May.

"Several ECB speakers have recently indicated that a rate

cut in June is highly likely, while ECB action thereafter will

depend on future data," UniCredit strategists said in a note.

"Euro zone PMIs and ECB negotiated wages, to be published on

Thursday, might shed further light in this respect."

Italy's 10-year yield was down 1.5 bps at

3.804%, and the gap between Italian and German bond yields

widened 1 bp to 129 bps.

Germany's two-year bond yield, which is sensitive

to ECB rate expectations, was 2 bps lower at 2.974%.

Markets see a June ECB cut as a near certainty but there is

more doubt about what will follow.

European bonds have often been driven by expectations about

the Federal Reserve over the last two years, given the size and

importance of the U.S. economy.

On Tuesday, two Fed policymakers said it was prudent for the

central bank to wait longer to ensure inflation was back on the

right path to the 2% target before commencing interest rate

cuts.

"I need to see several more months of good inflation data

before I would be comfortable supporting an easing in the stance

of monetary policy," influential Fed Governor Christopher Waller

said.

Data on Tuesday showed that German producer prices fell more

than expected in April, due mainly to lower energy prices.

The spread between U.S. 10-year Treasuries and German bond

yields was tighter by around 1 bp at 190 bps, down

from an almost five-year high near 220 bps in April.