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By Yadarisa Shabong

April 2 (Reuters) - Euro zone bond yields were muted on

Wednesday as markets await details of U.S. President Donald

Trump's reciprocal tariffs due later in the day and the

possibility of an escalation in the global trade dispute.

Trump was poised to impose sweeping new reciprocal tariffs

against global trading partners on Wednesday, details of which

were still being formulated and closely held ahead of an

announcement ceremony in the Rose Garden at the White House

scheduled for 2000 GMT.

The German 10-year bond yield, the benchmark for

the euro zone bloc, edged 0.5 basis points lower to 2.677%,

hovering near one-month lows after having dropped for the past

five sessions. Yields move inversely to prices.

Investors have been seeking a safe haven in gold and bond

markets in nervous anticipation ahead of what Trump calls

"Liberation Day". The format of the duties was unclear amid

reports that Trump was considering a 20% universal tariff.

The European Union has a "strong plan" to retaliate against

tariffs imposed and set to be imposed by Trump, although it

would prefer to negotiate a solution, EU executive chief Ursula

von der Leyen said on Tuesday.

"The fact that countries are expected to negotiate means

markets are expected to stay on edge for a longer period," said

Kenneth Broux, head of corporate research FX and rates at

Societe Generale.

If Europe can negotiate then the impact would be "fairly

manageable and the safe haven bid that would cause yields to

come down even further, I think would eventually start to

dissipate," Broux said.

Italy's 10-year yield was also steady at 3.793%,

and the gap between Italian and German 10-year bond yields

stood at 111 bps.

French 10-year bond yields held at 3.398%.

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

sensitive to European Central Bank rate expectations, edged down

2 bps at 2.002%.

Data on Tuesday showed euro zone inflation eased as expected

in March and a key measure of underlying price pressures also

fell. The looming trade war with the United States, however,

poses a threat to the euro zone economy.

Money markets are currently pricing in an 80% chance of

a 25 bps rate cut by the ECB in April, and have fully priced in

two cuts by September.

"In Europe, we expect weaker growth outcomes to outweigh

inflation concerns for the ECB, taking front-end yields lower

and curves steeper," Goldman Sachs said in a note.

However, with eventual fiscal loosening in Germany,

Goldman Sachs expects 10-year bund yields to stay near current

levels, estimating yields of 2.80% from an earlier forecast of

3% by end-2025.

"The path of least resistance ...is towards lower yields

until we have better visibility that the economy is not impacted

by the tariffs," Broux said.