Aug 16 (Reuters) - Euro zone bond yields edged lower on

Friday following a U.S. data-driven jump a day earlier, with

investors bracing for further volatility next week.

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

bloc, was down 2 basis points at 2.24% by 0645 GMT. It jumped

nearly 9 bps on Thursday on the back of strong U.S. data that

boosted confidence in the world's largest economy.

Weaker-than expected U.S. jobs data earlier in August had

fanned worries about a potential U.S. recession, sending bond

yields tumbling, a move echoed by euro zone debt.

But yields have rebounded with better-than-expected data in

recent days, with investors reducing their bets on a 50 bps U.S.

Federal Reserve rate cut in September.

In the euro zone, traders were betting on over a 95% chance

of a 25 bps European Central Bank rate cut in September and

around 65 bps of cuts by year-end.

Italy's 10-year yield was down 2 basis points to

3.62%, with the closely-watched risk premium, or spread, it pays

over Germany's at around 137 bps, near two-week lows.

(Reporting by Yoruk Bahceli; Editing by Muralikumar

Anantharaman)