May 28 (Reuters) - Euro zone government bond yields

edged up on Wednesday, snapping a four-day falling streak as

investors await developments on the tariff front, which could

affect the economic outlook.

U.S. President Donald Trump on Tuesday said the EU's move to

set up talks was positive and that he hoped Europe would "open

up" to trade with the U.S. even as he reiterated his threat to

impose trade terms if no agreement emerges.

Meanwhile, super-long-dated Japanese government bond yields

jumped after a sharp decline in the previous three sessions on

expectations that the Ministry of Finance was considering

cutting super-long bond issuance to ease market pressure.

Germany's 10-year government bond yield, the

euro area benchmark, was up 2 basis points (bps) at 2.55% after

hitting 2.513% on Monday, its lowest level since May 8.

U.S. stock index futures slipped on Wednesday after a sharp

rally in the previous session, when easing tariff tensions

boosted sentiment.

Some market participants expect the European Central Bank to

ease its monetary policy if U.S. tariffs prompt a sharp economic

slowdown in the euro area to prevent inflation from

undershooting the ECB's target.

Markets price in a 90% chance of an ECB 25 bps rate cut next

week. They also indicated a deposit facility rate at 1.70%

in December, from 1.55% in mid-April after

the ECB policy meeting.

ECB Chief Economist Philip Lane said that while most factors

pointed to euro area inflation continuing to fall, there were

others, including the risk of EU-U.S. trade talks failing, that

could drive inflation up.

The number of people out of work in Germany rose at a faster

pace than expected in May.

"Looking ahead, there are tentative signs of a bottoming out

of the labour market," said Carsten Brzeski, global head of

macro at ING.

"At the same time, ongoing announcements of potential

cost-cutting measures in the automotive and other industries and

the continuing increase in the number of bankruptcies are a

strong warning against premature celebration."

Benchmark 10-year U.S. Treasury yield was up 4

bps in London trade after declining 7.5 bps on Tuesday.

Italy's 10-year yield rose 2 bps to 3.55%.

The gap between Italian and German yields

stood at 97 bps, after reaching 90.90 bps last week, its lowest

level since March 2021.

According to Barclays, which has lowered its target range

for the Italian-German yield gap to 70-120 bps from 90-140 bps,

the recent tightening "reflects the dissolution of the

distinctions between core-periphery euro area government bonds."