LONDON, Aug 21 (Reuters) - Euro zone bond yields inched

higher on Thursday as markets digested better than expected euro

zone PMIs and gear up for the Federal Reserve's annual symposium

in Jackson Hole.

At 1106 GMT, German 10-year yields were up

nearly 3 basis points at 2.74%, while rate-sensitive 2-year

yields rose by 4 bps to 1.97%.

"Today for a change we actually have some data to move on,"

said Peter Schaffrik, chief European macro strategist, head of

UK & European economics & rates strategy at RBC.

He pointed to earlier PMI releases from the euro area and UK

as the main story behind rising yields - particularly in the

short-end of the curve.

Euro zone businesses saw new orders increase in August for

the first time since May 2024, a survey showed on Thursday,

helping overall activity expand at the fastest pace in 15 months

despite persistent weakness in exports.

It followed earlier releases from France and Germany, with

yields nudging higher as a result.

UK PMIs also showed stronger than expected growth on

Thursday, with British businesses clocking their strongest month

in a year thanks to a rebound in the dominant services sector.

Borrowing data also showed Britain's public borrowing in the

financial year so far has matched the forecasts that underpin

the government's tax and spending plans. This offered a bit of

breathing space to finance minister Rachel Reeves before bigger

challenges later this year.

UK 10-year gilts were 4 bps higher at 4.71%.

Looking ahead, Fed Chair Jerome Powell's speech on Friday

will be key as traders assess the chances of a September rate

cut by the U.S. central bank.

Money markets currently see an 80% chance of a 25 bps rate

cut at the Fed's next session in September.

"This renewed bid into the front end of the treasury curve

is coming from two fronts - one from weaker labour market data

but also from the pressure the Fed is receiving," RBC's

Schaffrik said.

Questions about the Fed's independence have resurfaced after

Trump on Wednesday called on Fed Governor Lisa Cook to resign on

the basis of allegations made by one of his political allies

over mortgages she holds. Cook says she has "no intention of

being bullied" to leave the Fed.

Any changes in Fed rate expectations often influence other

bond markets given the scale of the U.S. economy, the world's

largest.

Another key test will be the release of a euro zone consumer

confidence survey for August which follows later on Thursday.

Italy's 10-year yield was 3 bps higher at 3.58%.

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