Aug 19 (Reuters) - Euro zone government bond yields fell

on Monday as investors braced for a week packed with economic

data and a meeting of central bankers at Jackson Hole.

Investors await business activity figures and negotiated

wage growth data, which the European Central Bank will consider

before its September rate decision.

Bund yields, the benchmark for the euro zone

bloc, was down 2.5 basis points (bps) to 2.23%.

Euro area borrowing costs have tracked perceptions of risks

in the U.S. economy, with U.S. Treasury yields easing on Friday,

partly reversing the previous day's big gains as investors

digested data showing a resilient U.S. consumer and inflation

trending lower.

The spread between U.S. and German borrowing costs

was unchanged at 163 bps. It hit a 12-month low at

around 153 bps early this month.

Money markets priced in around 65 bps of ECB rate cuts in

2024, implying two 25 bps moves and an

around 60% chance of a third cut.

Italian 10-year yields dropped 2.5 bps to 3.62%,

with the yield gap between Italian and German bonds roughly

unchanged at 138 bps.