(Updates with afternoon trading)

By Sophie Kiderlin

LONDON, April 29 (Reuters) - Euro zone bond yields rose

to new multi-week highs on Wednesday as efforts to end the Iran

war appeared to be in a stalemate,driving up oil prices again

andspurring worries about persistent inflation.

Euro zone inflation data for April due on Thursday will

reinforce or assuage such worries just before the European

Central Bank announces its interest rate decision.

German inflation data released on Wednesday offered fodder

for both optimists and pessimists. The data showed a pick-up in

headline inflation due to higher energy prices but a drop in

core inflation, which excludes volatile prices such as energy.

"The fact that German core inflation actually dropped should

provide the ECB with some comfort, at least in the near term,"

said Carsten Brzeski, ING's global head of macro, in a note.

"Looking further ahead, calls for ECB rate hikes will get

louder," he added.

Still, bond yields continued their climb from recent

sessions as efforts to end the war in the Middle East seem to be

at an impasse. U.S. President Donald Trump urged Iran on

Wednesday to 'get smart soon' and sign a deal.

Ten-year bond yields, the benchmark for the euro

zone, briefly rose as high as 3.10%, their highest since late

March, and were last 3 basis points higher at 3.09%.

Rate-sensitive two-year yields touched their highest since

April 7 and were last up 6 bps at 2.70%. They have

risen for eight days in a row, which would be their longest

stretch of increases since April 2023.

ENERGY PRICE ANGST

Oil prices have been grinding higher as the crucial Strait

of Hormuz remains effectively shut. Brent crude futures

for June rose for the eighth day in a row on Wednesday and were

last up around 2.8% at $114.4 a barrel.

The question for the ECB is whether higher energy prices

spark a broader surge in prices across the euro zone.

The ECB is expected to leave interest rates unchanged this

month, but money markets are pricing in roughly three rate hikes

by the end of the year.

After Thursday's meeting, "we will wait until the next

meeting in June. Obviously, the main factor will be how the war

in Iran develops, how energy prices will develop. I think the

ECB wants to collect more data. They will also have new

forecasts in June. If they want to hike, that would be the

date," said Felix Schmidt, senior economist at Berenberg.

Investors will also be watching closely for any comments

from policymakers about the impact of the Iran war on the

economy and monetary policy.

The U.S. Federal Reserve, which concludes its own meeting

later on Wednesday, is also expected to keep rates on hold for

now. The meeting is likely Jerome Powell's last as Fed chair.