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

higher on Thursday as markets gear up for the Federal Reserve's

annual symposium in Jackson Hole and await Euro zone flash PMIs.

German 10-year yields were up nearly 2 basis

points at 2.73%, while rate-sensitive 2-year yields

were flat at 1.94%.

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.

Any changes in Fed rate expectations often influence other

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

largest.

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.

Meanwhile, traders are awaiting euro zone flash PMIs for

August, which RBC economists say will be a major test of the

impact tariffs are having on the economy.

"We think the PMIs will weaken in August, but not by enough

to seriously question the view that tariffs will not interrupt

the euro area's growth recovery," they wrote in a note.

But early data from France showed business activity there

outperformed expectations, edging closer to growth and at its

highest in a year.

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

confidence survey for August which follows later on Thursday.

In the UK, borrowing data 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.

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