LONDON, Dec 29 (Reuters) - Euro zone government bond

yields edged down on Monday, with benchmark 10-year German Bund

yields holding below recent nine-month highs in trade thinned by

the holiday season.

That move followed a decline in U.S. Treasury ‌yields on

Friday, when markets across much of Europe were closed.

An easing in speculation over the ​scope for European Central

Bank rate hikes in the year ahead has helped ‍take pressure off a

rise in borrowing costs across ⁠the bloc. Top hawk ⁠Isabel

Schnabel said last week she expected no rate increase in the

foreseeable future.

Germany's 10-year Bund yield ‌held below nine-month highs

touched last week ​and was last trading about 2 basis points

(bps) lower on the day at around 2.85%.

Most 10-year bond yields across the ⁠euro area were down

about 2-3 ‍bps as ​their prices rose .

Signs of progress on ending the war in Ukraine did not

appear to have much of an impact on safe-haven bonds ‍although

European defence shares fell more than 1%.

U.S. President Donald Trump said on Sunday that he and

Ukrainian President Volodymyr Zelenskiy were moving closer to an

agreement to end the war in Ukraine, but acknowledged that the

fate of the Donbas region remained an unresolved issue.

Investors in European bond markets ​also have ‍one eye on the

Netherlands as a new year approaches.

The Dutch occupational pension system, the European Union's

largest, will start the transition ​to a new system from January

1, allowing the nearly 2 trillion euro ($2.35 trillion) sector

to buy riskier assets.

This could add to pressure on long-term government bonds

that already face reduced demand from big buyers such as central

banks and other pension funds.

The German 10-year bond yield is on track to end the year

about 50 bps higher, ​set for its biggest one-year rise since

2022 when inflation across major economies surged.

This is in contrast to a fall in U.S. Treasury yields, which

have been pushed down by expectations ‍for U.S. Federal Reserve

cuts.