LONDON, April 27 (Reuters) - Euro zone short-dated

government bond yields were little changed after wavering

earlier on Monday, as no major weekend developments in the

U.S.-Israeli war with Iran left traders to focus on this week's

European Central Bank meeting.

While policymakers are expected to keep interest rates steady on

Thursday, investors will be scrutinising their statement and ECB

President Christine Lagarde's press conference for any

expectations for the euro zone economy and what policy response

might be appropriate.

Markets currently see roughly a 20% chance that the ECB hikes

rates by 25 basis points this week, around a 75% chance it does

so by its June meeting and expect at least one such move and

potentially two by the July meeting.

That pricing on Monday was similar to Friday, helping Germany's

two-year yield trade flat on the day at 2.56%.

Germany's benchmark 10-year yield meanwhile was a whisker higher

at 3.024%.

Before the war, markets expected the ECB to be on hold

throughout this year, but traders dramatically reassessed those

expectations in March, betting that policymakers would feel

obliged to raise rates to prevent higher energy costs from

spilling over into inflation more broadly.

This week's meeting will give investors their latest insight

into the ECB's thinking.

"If the ECB signals that June is 'live', front-end yields

could move higher. However, a more cautious tone appears more

likely, reinforcing patience and limiting the extent to which

markets price in additional tightening," said Annalisa Piazza,

fixed income portfolio manager at MFS Investment Management.

She said that as financial conditions were already

tightening and growth concerns mounting, "the ECB is unlikely to

encourage expectations of multiple near-term hikes".

This stance, she said, could send shorter-dated yields lower.

Potentially offering some support to the view that rate-setters

can afford to be a bit cautious with rate hikes, anECB survey

published on Monday showed that while euro zone firms expect

inflation to surge in the near term on the Iran conflict,

longer-term bets remained steady and wage growth is expected to

moderate.

Other countries' bonds were moving in line with the benchmark.

Italy's two-year yield was also flat at 2.794%, although its

10-year yield was 2 bps higher at 3.837%.

In addition to the ECB meeting, traders also will be

watching a number of other major central banks. The Bank of

Japan announces its policy decision on Tuesday, the Federal

Reserve releases its statement on Wednesday and the Bank of

England will make its announcement on Thursday.

All are expected to keep rates steady.