LONDON, Dec 10 (Reuters) - Euro zone bond yields

struggling to find direction on Tuesday as investors sat tight

ahead of the European Central Bank's policy announcement later

in the week.

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

euro zone, was last down less than 1 basis point (bp) on the day

at 2.122%. It hit 2.03% last week, its lowest October 1.

Bond yields move inversely with prices.

Yields have been falling across most of the major euro zone

economies in recent weeks as the bloc's growth outlook weakened,

adding to expectations that the ECB will cut rates.

Markets are fully pricing a 25 basis rate cut at Thursday's

policy announcement, while around 130 bps of easing is priced by

July's meeting next year, implying around five quarter-point

rate cuts.

Germany's policy sensitive two-year yield was

down 1.5 bps on Tuesday at 1.985%, just above last week's

two-year low of 1.891%.

French bonds, which have underperformed Germany's in 2024,

were also steady as President Emmanuel Macron continues to

search for a new government after former Prime Minister Michel

Barnier was ousted in a confidence vote last week.

France's 10-year yield was down 0.5 bps at

2.865%.

Italy's 10-year yield, the benchmark for the

euro zone periphery, was little changed at 3.196%.