April 12 (Reuters) - Euro zone government bond yields

dropped on Friday as fears of a broadening of the Middle East

conflict boosted safe-haven assets, while markets slightly

increased their bets on European Central Bank future rate cuts.

Money markets price in around 82 basis points (bps) of

monetary easing from the ECB in 2024, up from 75 bps late on

Thursday. The central bank said on Thursday it may cut rates

soon.

"We think that markets will likely enter a consolidation

phase today, with dip-buying likely prevailing in euro rates,"

said Evelyne Gomez-Liechti, rates strategist at Mizuho Bank.

"The risk of an Iranian attack on Israel during the weekend

will likely help the bid in rates," she added.

Germany's two-year bond yields was last down 6 bps on the

day at 2.9%, while 10-year Bund yields fell 7.5 bps

to 2.4%.

Gold surged to fresh peak supported by safe-haven demand

amid ongoing tensions in the Middle East.

Israeli Defence Minister Yoav Gallant said on Thursday that

Israel would respond directly to any attack by Iran. The

Pentagon said it discussed with Gallant the United States'

"iron-clad" commitment to Israel's security against threats from

Iran and its proxies.