March 7 (Reuters) - Benchmark 10-year U.S. Treasury

yields fell to one-month lows on Thursday after the European

Central Bank (ECB) revised down its inflation projections and

before key U.S. jobs data on Friday.

Federal Reserve Chair Jerome Powell will also testify before

Congress for a second day after saying on Wednesday that

interest rate cuts are likely in coming months, but only if

warranted by further evidence of falling inflation.

The ECB left interest rates unchanged as expected on

Thursday but acknowledged that inflation is easing faster than

once thought, potentially opening the way for rate cuts later

this year.

That sent European bond yields lower, with markets now

pricing in over 100 basis points rate cuts by the ECB this year.

Treasury yields also fell and "are just following the move

in Europe," said Tom di Galoma, managing director and co-head of

global rates trading at BTIG in New York. "It was kind of a

dovish signal from the ECB."

Investors will next watch Friday's employment report for

February for clues on when the U.S. central bank is likely to

begin cutting rates. It is expected to show that employers added

200,000 jobs during the month.

Unemployment and wage inflation will also be scrutinized. It

will come after unexpectedly strong jobs and inflation reports

for January, which were attributed in part to seasonal factors.

Benchmark 10-year yields were last down 1 basis

points on the day at 4.096%, after earlier reaching 4.054%, the

lowest since Feb. 5.

Two-year yields fell 2 basis points to 4.539%.

The inversion in the yield curve between two-year and 10-year

notes narrowed by one basis points to minus 44

basis points.

Fed funds futures traders are pricing in a 73% probability

the Fed will begin cutting rates in June, according to the CME

Group's FedWatch Tool.