LONDON, April 18 (Reuters) - Euro zone bond yields fell

slightly on Thursday as European Central Bank policymakers lined

up behind a rate cut in June and as the recent surge in oil

prices showed signs of running out of steam.

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

the euro zone, fell 3.4 basis points to 2.44%. Yields move

inversely to prices.

The German 10-year yield slipped 1.5 basis points on

Wednesday, but was still hovering near its highest level since

late February, which it hit on Tuesday.

Italy's 10-year bond yield was lower by 6.4

basis points​ at 3.82%, and the gap between Italian and German

bunds narrowed 2.4 basis points to 137 bps.

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

widened 0.7 basis points to 213 bps.

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

sensitive to ECB rate expectations, was down 2.3 bps at 2.93%.