LONDON, April 4 (Reuters) - Euro zone bond yields moved

lower on Thursday, helped by cooler than expected inflation data

in the currency bloc the day before as well as remarks by the

U.S. central bank chief which helped bring a bit of calm to

global government bond markets.

** The yield on Germany's 10-year Bund dropped 2 basis

points to 2.38%, a second day of small declines.

** Wednesday data showed euro zone inflation came in at 2.4%

year-on-year in March, after 2.6% in February. Economists polled

by Reuters had expected the rate to stay at 2.6%, although

individual country releases in the preceding days pointed to a

slightly lower number.

** That data served to reinforce market expectations that

the European Central Bank will cut rates at its June meeting.

** U.S. developments also sent bond yields lower around the

world on Wednesday. Federal Reserve Chair Jerome Powell said

that "if the economy evolves broadly as we expect", he and his

Fed colleagues largely agree that a lower policy interest rate

will be appropriate "at some point this year".

** U.S. services activity data also showed the measure of

prices paid by businesses for inputs dropped to a four-year low,

boding well for the inflation outlook, though U.S. private

payrolls increased more than expected.

** Italy's 10 year yield dropped 3 basis points

to 3.80%