LONDON, Sept 25 (Reuters) - Euro zone bond yields rose

slightly on Wednesday after falling during the two previous

sessions as investors positioned for more rate cuts from the

European Central Bank.

Weak European survey data, a downbeat German business morale

report and a fall in U.S. consumer confidence have added

momentum to bets that the ECB could lower rates again in

October, after two previous 25 basis-point cuts this year.

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

the euro zone bloc, rose 5 bps to 2.18% after falling 9 bps

across the previous two sessions.

Yields move inversely to prices.

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

to European Central Bank rate expectations, was up 3.5 bps at

2.13%, after falling 16 bps across Monday and Tuesday.

Money market pricing showed traders pricing in a 60% chance

of an ECB interest rate cut in October from

around 20% early this week. The ECB cut rates in June and

earlier this month.

"We still see a lower chance of a cut for the 17 October

meeting since it effectively holds little new data on top of

what the European Central Bank will have known in September,"

said Benjamin Schroeder, senior rates strategist at ING.

"European rates may be getting too far ahead of themselves

and are being dragged down excessively by U.S. markets," he

said.

The U.S. Federal Reserve cut rates by 50 bps last week.

Investors have been keeping a close eye on French yields,

which yesterday rose above Spain's for the first time since 2008

due to concerns about the new government's ability to tackle the

budget deficit.

The gap between French and German 10-year yields

rose 2 bps to 79.90 bps. It shot to its highest

level since 2012 above 85 bps during France's parliamentary

elections.

Data on Wednesday showed French consumer confidence picked

up this month while an ECB survey suggested wage pressures were

easing across the euro zone.

Italy's 10-year yield rose 6 bps to 3.54%, and

the gap between Italian and German yields widened

2 bps to 134.5 bps.