(Updates to Europe morning, adds comments, background and

graphic)

Sept 12 (Reuters) - European government bond yields were

on course to end the week higher, as investors lowered

expectations of rate cuts by the European Central Bank, while

focus was also on a French credit review due after the market

close.

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

zone, rose to 2.69%, up about 4 basis points on the

week.

The interest rate sensitive 2-year yield rose as far as

2.0250%, its highest since April.

Much of its 10 bp rise for the week came on Thursday after

the ECB left interest rates unchanged as expected and offered no

clues about its next move.

JPMorgan now expects the central bank to lower interest

rates once more this year, in December, from a previous forecast

of October.

Money markets are currently pricing in less than a 40%

chance of a 25 bp cut by June 2026, down from near 50% after

Thursday's policy meeting.

Other regional bond yields, like those of France and Italy,

were trading largely in line with Germany's.

There seems to be a great degree of confidence at the ECB

that existing policy rates are at an appropriate level which is

likely to support the front end of the yield curve going

forward, said Kenneth Broux, head of corporate research FX and

rates at Societe Generale.

The paring of euro zone rate-cut wagers came as money

markets fully priced in a 25 bp cut by the U.S. Federal Reserve

next week.

"The most important question...will probably be about the

pace of cuts/the October decision. Powell will likely give the

boilerplate response that all meetings are live, but no decision

was made about October at the September meeting," analysts at

BofA Global Research said in a note.

The divergent outlook for the two central banks has driven

the spread between 10-year German and U.S. yields

to the narrowest since July 2023.

The two-year U.S. Treasury yield was a last touch

higher at 3.557%, with the 10-year yield at 4.04%,

down 4 bps on the week and hovering near its lowest level since

April.

A review of France's AA- sovereign debt rating by Fitch is

expected later on Friday.

The spread between French and German 10-year bond yields

was last at 77 bps, down from this week's

six-month high of 83.38 bps.

While a rating downgrade would mark another step in the

wrong direction for France, it's unlikely to spur a major market

reaction as some of those expectations are already priced in,

Societe Generale's Broux said.