LONDON, Aug 6 (Reuters) - Euro zone bond yields inched

up from near two-week lows on Wednesday after four days of small

declines, with the gap between Italian yields and those of

German bonds holding around its narrowest level in years.

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

rose nearly two basis points to 2.64%, largely in line with

moves in the U.S. and other major developed markets.

It hit a near two-week low of 2.601% on Tuesday.

Trading has been fairly muted this week due to the European

summer lull. But traders on Tuesday were digesting data that

showed business activity in the euro zone grew at a slightly

faster pace in July than in June and that U.S. services sector

activity unexpectedly flatlined.

Rate sensitive 2-year German yields moved in line with the

rest of the curve, also up nearly two bps to 1.91%.

Similarly, Italy's 10-year yield also rose around two bps to

3.47%.

That left the gap between German and Italian 10-year yields

at 82 bps, around the tightest level since 2010. Italy's

relatively strong economic performance and general optimism

across markets and asset classes have been driving that spread

tighter in recent years.