(Updates after ECB decision)

By Greta Rosen Fondahn and Stefano Rebaudo

Dec 12 (Reuters) -

Euro zone government bond yields held firm on Thursday after

the European Central Bank (ECB) delivered a 25 basis-point rate

cut in line with expectations.

The ECB cut rates for a fourth time this year, with

money markets having fully priced in the 25 basis-point

reduction ahead of the decision, while expectations for a larger

cut had been close to zero.

The central bank

kept the door open

to further easing ahead as inflation closes in on its goal

and the economy remains weak.

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

the euro zone bloc, was up less than 1 basis point (bp) to

2.139%. Ahead of the ECB decision, the yield was trading at

2.144%. Yields move inversely to prices.

While the ECB has now reduced interest rates at four of its

five last meetings, the debate has shifted to whether it is

easing policy fast enough as euro zone economic data has painted

a weaker picture than expected, amid the prospect of a new trade

war with the United States.

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

ECB rate expectations, was down 2 bps at 1.944%, from 1.954

beforehand.

Italy's 10-year yield was up 3 bps to 3.233%,

after hitting a fresh 28-month low of 3.162% the day before.

The spread between Italian and German borrowing costs

- a gauge of the risk premium investors demand to

hold Italian debt - was 3 bps wider at 109 bps, broadly similar

to before the decision. It hit 104.50 bps earlier this week, its

lowest since October 2021.

The yield gap between French government bonds and safe-haven

German Bunds was 1 bps narrower at 75.6 bps.

President Emmanuel Macron set himself 48 hours to name a new

government on Tuesday.

The Swiss National Bank cut its interest rate by 50 basis

points on Thursday, its biggest reduction in almost 10 years.

Investors were also looking ahead to next week's Federal

Reserve meeting after U.S. data showed on Wednesday that

progress towards the Fed's inflation goal has stalled.