(Updates for European morning trading)

By Samuel Indyk and Yoruk Bahceli

LONDON, Sept 23 (Reuters) - Euro zone bond yields were

little changed on Tuesday after the release of mixed business

activity data from the bloc and heavy government bond issuance.

The HCOB Flash Eurozone Composite Purchasing Managers' Index,

compiled by S&P Global, edged up to 51.2 in September from 51.0

in August, the ninth consecutive month of growth. A reading

above 50 indicates expansion while below signals contraction.

But an index measuring composite new business dipped to the

breakeven point of 50 from 50.3, potentially raising concerns

about the sustainability of the bloc's growth.

EXPECTATIONS FOR ECB REMAIN STEADY

"September's flash PMIs suggest that the euro zone economy

grew fairly slowly again in Q3 and that price pressures eased,"

said Jack Allen-Reynolds, deputy chief euro zone economist at

Capital Economics.

Germany's 10-year yield, the euro zone

benchmark, was little changed after the data at 2.745%, just

below a two-week high of 2.762% reached on Monday.

Market expectations for European Central Bank easing

remained steady after the data, keeping shorter-end yields

little changed.

Futures markets are pricing in about 12 basis points of

easing by June next year, implying a less than 50% chance of

another rate cut.

The central bank last cut the deposit rate in June, lowering

it to 2%, before holding interest rates steady at the last two

policy meetings.

"Markets are not fully pricing any ECB action going forward

but there's always the threat in the air that they might be

forced to lower the deposit rate again," said René Albrecht, an

analyst at DZ Bank.

POWELL DUE TO SPEAK LATER

Investors were also hoping for some clarity from the Federal

Reserve on Tuesday after it resumed its rate cutting cycle last

week but provided mixed communication on the future path for

interest rates.

New Fed governor Stephen Miran outlined his reasons for wanting

lower rates on Monday, a view that was countered by three

colleagues who feel the central bank needs to remain cautious

because of inflation.

Fed chair Jerome Powell is scheduled to speak on the

economic outlook later on Tuesday.

Germany's policy-sensitive two-year yield was up

less than 1 bp at 2.023% after matching its highest since April

on Monday at 2.03%.

Attention was also on bond supply on Tuesday, with the

Netherlands selling 5 billion euros ($5.90 billion) of 30-year

bonds, the top end of the targeted sale amount.

The long-end auction precedes the overhaul of the Dutch

pension system next year. The change to a defined contribution

system, as opposed to defined benefit, would mean pension funds

will have less need to buy bonds, and longer-dated bonds in

particular, as they will no longer promise specific long-term

benefits.

JaapTeerhuis, strategist at ABN AMRO who used to lead the

dealing room for the Dutch Treasury, said it was difficult to

say what the auction results meant for the pension fund

transition but added the result suggested the market was happy

with current pricing on Dutch bonds.

Longer-dated bonds have been hit in recent months by

investor worries over the sustainability of high government debt

levels in countries including France, Britain, the U.S. and

Japan.

Germany's 30-year yield was down 1.5 bps at

3.346%.

($1 = 0.8481 euros)