(Updates throughout.)

By Joice Alves

LONDON, Oct 23 (Reuters) - Euro zone government bond

yields edged up on Thursday shrugging off U.S. moves to impose

sanctions on Russia and consider more trade restrictions on

China, as the recent flight to safe-haven assets eased and

investors awaited data for direction.

U.S. President Donald Trump on Wednesday hit Russian oil

companies Lukoil and Rosneft with sanctions as his frustration

grows over Moscow's war in Ukraine. The move came after European

Union countries on Wednesday approved a 19th package of

sanctions on Russia.

The Trump administration is also considering a potential

escalation of its trade war with China, with a plan to curb an

array of software-powered exports to China to retaliate against

Beijing's latest round of rare earth export restrictions.

After dropping for four straight trading days last week with

bonds getting support from safe-haven demand, Germany's 10-year

bond yield, the benchmark for the euro zone, rose

1.5 basis points to 2.57%.

Investors will look at euro zone consumer confidence data

due later in the day, while the U.S. government shutdown is

still ongoing.

"Another light day in terms of data ... we will have the

euro zone consumer confidence index for October. Consumer

confidence is failing to pick up in the euro zone," said Michiel

Tukker, Senior European Rates Strategist at ING, adding that the

U.S. shutdown means markets don't expect jobless claims data.

EYES ON US INFLATION

The focus this week across global markets remained on the

U.S. consumer price index report, due on Friday after a delay

due to the shutdown, with the lack of data in the world's

biggest economy frustrating investors.

The report is expected to show that core inflation held at

3.1% in September. The outcome is not seen changing expectations

that the Federal Reserve will cut rates next week.

Italy's 10-year yield was up 1.7 bp at 3.36%.

This left the gap between Italian and German bonds

at 77 bps, briefly falling to 76, the narrowest

gap since around April 2010, according to LSEG Datastream data.

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

to European Central Bank rate expectations, was up 0.9 bps at

1.92%.