LONDON, Dec 18 (Reuters) - Euro zone bond yields held

steady on Wednesday as investors waited for the Federal

Reserve's interest rate decision later in the day.

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

the euro zone bloc, was little changed at 2.23%.

Italy's 10-year yield was 1 basis point (bp)

higher at 3.392%, and the gap between Italian and German bond

yields stood at 116 bps.

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

to European Central Bank rate expectations, fell 1 bp to 2.042%.

The Fed is expected to cut rates 25 bps. The central bank

strongly influences the U.S. government bond market, which sets

the tone for borrowing costs around the world.