(Updates at 1035 GMT)

By Harry Robertson

LONDON, Aug 28 (Reuters) - Euro zone bond yields fell

slightly on Wednesday after rising the previous day as investors

waited for Nvidia's ( NVDA ) earnings after the U.S. close and for

European inflation data on Friday.

German 10-year bond yield, the benchmark for the

euro zone bloc, fell 3 basis points (bps) to 2.247%, undoing a 3

bp rise on Tuesday.

"Today the focus would be on the earnings with Nvidia ( NVDA )

reporting later today," said Mohit Kumar, chief economist for

Europe at Jefferies. "It's light on the data front."

Chip-maker Nvidia ( NVDA ) has been at the heart of the artificial

intelligence-driven stock market rally, and investors will pore

over its results for clues about the longevity of the AI boom.

Confidence in AI wobbled at the start of August,

contributing to a stock sell-off that sent investors towards

safe-haven government bonds.

Euro zone inflation data is then due on Friday and is

expected to show price growth in the bloc slowed to 2.2%

year-on-year in August, down from 2.6% in July.

Traders on Wednesday were pricing in around 63 bps of

further European Central Bank rate cuts by the end of the year,

little changed from the end of last week.

Italy's 10-year yield was lower by 4 bps at

3.626%, after rising 7 bps on Wednesday.

Commerzbank's head of rates and credit research Christoph

Rieger said a rise in the supply of corporate bonds hitting the

market could have contributed to the pick up in yields on

Tuesday.

"As there will for sure be enough government bonds to buy,

other asset classes where the supply seems more finite are seen

as the better choice," he said.

Shorter-dated yields, which are more sensitive to central

bank rate expectations, have remained better anchored than their

longer-dated peers as investors look forward to more rate cuts

in the coming months.

Germany's two-year bond yield was down 1 bps at

2.384%, after ending Tuesday flat.

The gap between Italian and German yields

narrowed 1 bp to 138 bps, after rising 4 bps on Tuesday in its

biggest daily climb in a month.