LONDON, Oct 30 (Reuters) - European stocks, government

bonds and the euro held steady on Thursday after the European

Central Bank kept rates unchanged at 2%, as expected, as it

enjoys a rare period of low inflation and stable growth.

The ECB kept rates unchanged for a third straight meeting

and said its assessment of the inflation outlook was broadly

unchanged.

Markets maintained its view that the ECB would keep their

deposit rate unchanged through the end of the year. Turning to

next year, investors were pricing in about 8 bps of easing by

year-end 2026, implying about a 32% chance of another

quarter-point cut.

"Where's the smoking gun for a rate cut? Despite the U.S.

tariffs, despite all the various sources of uncertainty, the

European economy continues to eke out some growth," Deutsche

Bank chief European economist.

"Economic 'resilience' is keeping the ECB doves in

check, and the policy pause on the rails."

The euro was last down 0.2% against the dollar at

$1.1572, close to where it was trading before the decision. The

dollar had risen against most major currencies on Thursday after

Federal Reserve Chair Jerome Powell introduced some uncertainty

over a December rate cut, given the absence of economic data.

Germany's 10-year bond yield, the benchmark for

the euro zone, was last up 3.5 basis points at 2.655%.

The policy-sensitive two-year yield was up 3 bps

at 2.007%. Bond yields move inversely with prices.

The pan-European STOXX 600 index was down 0.6%. An

index of euro zone banks was lower by 0.8%.

Investors and economists alike were waiting to hear more

from ECB President Christine Lagarde at the post-meeting press

conference.

At the last meeting, the ECB chief said central bank

policy was "in a good place", in that policymakers can tolerate

small, temporary deviations from their 2% inflation target.

Data points since then show the euro zone has held up

reasonably well, with business activity gathering momentum over

October and inflation pressures showing no signs of taking off.