May 23 (Reuters) - Euro zone government bond yields rose

on Thursday, with the German 2-year yield hitting its highest in

six months, after the Purchasing Managers' Index (PMI) showed

business activity in the euro zone has expanded at its fastest

pace in a year this month.

The bloc's PMI climbed to 52.3 this month from April's 51.7,

beating expectations in a Reuters poll for a rise to 52.0.

Money markets last priced in 60 basis points (bps) of ECB

rate cuts in 2024 from 67 bps early on

Wednesday, before a higher-than-expected reading of UK

inflation.

Germany's 10-year yield, the bloc's benchmark,

rose 4 bps to 2.57%, its highest since May 2.

Germany's 2-year government bond yield, which is

more sensitive to policy rate expectations, rose 5 bps to 3.056%

its highest since November.

(Reporting by Stefano Rebaudo, editing by)

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