(Updates with European midday trade)

By Greta Rosen Fondahn

Jan 23 (Reuters) - Euro zone bond yields edged higher on

Thursday, while investors awaited more certainty around U.S.

President Donald Trump's trade policies and looked ahead to next

week's central bank meetings.

Trump did not immediately impose tariffs on U.S. imports on

his first day back in the White House, as some investors had

been preparing for, but said he is mulling tariffs of around 25%

on Canada and Mexico and around 10% on China from Feb. 1.

He has also vowed to impose duties on European Union

imports.

The uncertainty surrounding tariffs has left investors in a

wait-and-see mode, with Germany's 10-year bond yield

, the benchmark for the euro zone, moving less than 1

basis point (bp) higher this week.

Ten-year Bund yields rose around 1 bp to 2.511% on Thursday.

Yields move inversely to prices.

Yields jumped in the first weeks of the year in a global

bond selloff over fears that tariffs could heighten U.S.

inflation risks while the economy is already roaring ahead.

Germany's 10-year bond yield hit a seven-month high of 2.63%

on Jan. 15, but then dropped sharply after core U.S. consumer

price inflation came in below expectations.

"We see rates drifting lower over the coming months, but

uncertainty over tariffs and inflation will prevent a

significant rally," said Mohit Kumar at Jefferies.

Italy's 10-year yield was up 2 bps to 3.623% on

the day, while the gap between Italian and German yields

stood at 110.4 bps.

U.S. 10-year Treasury yields were also up,

rising 3 bps to 4.6314%.

Markets expect the European Central Bank will cut interest

rates by 25 bps next week, while the U.S. Federal Reserve is

seen holding rates steady.

Traders currently price in around 95 bps in rate cuts from

the ECB this year.

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

sensitive to ECB rate expectations, was 1 bp higher at 2.248%.

Later on Thursday, euro zone consumer confidence data may

provide clues on the outlook for the European economy.

"The outcome deserves monitoring because private consumption

is expected to increasingly contribute to growth this year as

real incomes recover to their pre-pandemic levels," said

UniCredit analysts in a note.