Euro zone bonds echo firm Treasuries; US shutdown rumbles on

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Bund yields hold steady, in line with strong Treasuries

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US private sector jobs report flags weakening labour market

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US government shutdown stirs up uncertainty

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France, Spain hold bond auctions later

LONDON, Oct 2 (Reuters) - Euro zone government bond yields held steady on Thursday, echoing strength in the U.S. debt market, after private sector data suggested the labour market is weakening, while a U.S. government shutdown made for an uncertain backdrop.

Wednesday's ADP monthly report showed 32,000 workers left in September from U.S. private sector payrolls, against forecasts for a rise of 50,000, and after a downwardly revised 3,000 drop in August.

With the government in Washington closed, there is unlikely to be a nationwide monthly employment report on Friday, as originally scheduled, leaving economists, investors and politicians alike in the dark about the wider jobs picture.

German 10-year Bunds, which serve as the benchmark for the wider euro zone, were virtually unchanged at 2.712%, having ended Wednesday roughly around this level following an intraday dip to 2.693%. Bund yields, which have traded relatively flat for the last couple of months, are heading for a second weekly decline, marking their first two-week drop since mid-June.

"Bund dips should continue to be bought while the market is flying blind with key U.S. labour market data not released due to the U.S. shutdown," Commerzbank chief rates strategist Christoph Rieger said, adding that the shutdown does little to help sentiment and "we suggest buying Bunds at 10y yields above 2.7%.

German two-year Schatz yields, which are more responsive to near-term shifts in expectations for euro zone interest rates, were also steady at 2.013%.

On the supply front, France will sell 11.5 billion euros' worth of a combination of 10-year debt and other maturities, including green bonds, at auction later on Thursday.

Germany's sale of 10-year Bunds on Wednesday attracted tepid demand, with a bid-to-cover ratio of just 1.2, in line with the lowest levels this year.

French 10-year yields, which on Thursday were trading steadily at 3.528%, are now among the highest in the euro zone, behind Italy, where yields are around 3.55%, reflecting investor concern about the sustainability of France's long-term finances.

Spain, whose credit rating was upgraded on Friday by both Moody's and Fitch, will sell around 5.5 billion euros in nominal and inflation-linked debt as well.

(Reporting by Amanda Cooper; Editing by Tomasz Janowski)