May 14 (Reuters) - Euro zone government bond yields

edged up to reach fresh multi-week highs on Wednesday as easing

trade tensions allayed concerns about economic growth.

Analysts noted that the economic data calendar was thin on

Wednesday, but investors awaited Thursday's U.S. economic

reports, which could provide further insight into the impact of

the initial phase of tariffs.

Euro area borrowing costs jumped on Monday following a

preliminary U.S.-China trade deal and comments from European

Central Bank board member Isabel Schnabel suggesting the ECB

should stop cutting rates.

Germany's 10-year yield, the euro area's

benchmark, rose 1.5 basis points (bps) to 2.691%, its highest

level since April 10.

Money markets priced in the European Central Bank deposit

facility rate to be at 1.80% by year-end,

up from 1.67% late Friday and from below 1.55% after the ECB

suggested in mid-April it will cut rates in response to a

possible tariff-induced economic slowdown.

They also indicated an almost 95% chance of a rate cut in

June and about a 10% chance of a second easing move in July.

German 2-year yields, more sensitive to ECB

policy rates, were up one basis point at 1.95%.

U.S. Treasury yields dropped in early London trade - with

the 10-year down 3 bps at 4.47% - after rising the

day before as investors worried about inflation picking up in

the coming months.

Italy's 10-year yield rose one basis point to 3.71%

, after reaching 3.756%, its highest since April 14.

The spread between Italian and German yields - a market

gauge of the risk premium investors demand to hold Italian debt

- was at 99.5 bps, after reaching 93.80 the day

before, its lowest since early April 2021.