(Updates prices at 1435 GMT)

By Alun John

LONDON, May 22 (Reuters) - Euro zone bond yields rose on

Wednesday after British data reminded investors of the

stickiness of services inflation and reinforced expectations

that central banks will be cautious when it comes to interest

rate cuts.

The German 10-year bond yield, the benchmark for

the euro zone bloc, touched 2.556% in early trade, its highest

in three weeks, and was last 2 basis points higher at 2.525%.

Eyes were on data out of Britain which showed consumer

prices rose by an annual 2.3% last month, down sharply from a

3.2% increase in March, but above market expectations.

British services inflation was sticky, inching down to 5.9%

from 6.0% in March, leading markets to push back their

expectations for the first Bank of England rate cut.

Markets see a rate cut by the European Central Bank in June

as all but certain, but their path after that is unclear,

meaning investors are paying close attention to both European

inflation data as well as that from around the world.

Market pricing currently indicates a further 25 bps ECB cut

in the autumn and a chance of one more by year end.

"Persistence of services inflation is something we saw in

Canada as well yesterday. An inflection point in monetary policy

is coming but don't expect it to be an out and out easing cycle

in G10," said Kenneth Broux, head of corporate research, FX and

rates at Societe Generale.

Canada's annual inflation rate slowed to a three-year low of

2.7% in April, though services prices rose 4.2% on an annual

basis, Tuesday data showed, while the Reserve Bank of New

Zealand, at its meeting earlier Wednesday, wrongfooted markets

by warning that cuts were unlikely until far into 2025.

The U.S. Federal Reserve releases the minutes of its May 1

meeting later today, another piece of information from outside

the bloc that euro zone rates investors will be watching.

Within the euro zone, Germany's Bundesbank on Wednesday

warned that wages in Germany have been rising faster than

expected, casting some doubt on expectations for a continued

fall in inflation.

Italy's 10-year yield was higher by 2 basis

points at 3.823%, and the gap between Italian and German bunds

was little changed at 129 bps.

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

sensitive to European Central Bank rate expectations, was 3

basis points higher at 3.004%.

Also notable for government bond investors, Japan's 10-year

government bond yield rose to an 11-year high of 1% on

Wednesday.

(Reporting by Alun John; Editing by Hugh Lawson and Ros

Russell)