LONDON, Oct 30 (Reuters) - Euro zone bond yields were

lower on Wednesday before German and Spanish inflation releases

that could affect interest rate expectations for the European

Central Bank.

Euro area-wide figures are released on Thursday.

Germany's 10-year yield, the euro zone

benchmark, fell 3.5 basis points (bps) to 2.296%, reversing some

of Tuesday's 5 bp rise. It touched an almost three-month high of

2.352% on Monday.

Markets are currently pricing about 36 bps of easing at the

ECB's next policy meeting in December, implying at least a

quarter-point cut and around a 44% chance of a larger 50 bp

move.

Softer consumer inflation figures from Germany and Spain

could push markets to price in a greater chance of an half-point

move at the ECB's December meeting.

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

changes in interest rate expectations, fell 1.5 bps to 2.153%.

Eyes were also on Britain's first budget under the new

Labour government.

Finance minister Rachel Reeves is expected to announce large

tax hikes and spending plans, while hoping to avoid triggering

the kind of bond market chaos that brought down former prime

minister Liz Truss in 2022.