Bund yields near 4-week high tracking US Treasuries, BoE in focus

By Stefano Rebaudo

Nov 6 (Reuters) - Euro zone benchmark Bund yields hovered near a four-week high on Thursday, tracking Wednesday's moves in U.S. Treasuries, as investors awaited the Bank of England's policy decision later in the day.

Germany's 10-year yields were flat at 2.67% after hitting 2.676% earlier in the session, their highest level since October 10. Benchmark 10-year U.S. Treasury yields fell one basis point after rising 6.5 bps the day before as data showed continued U.S. economic resilience and a Treasury refunding announcement indicated potential future increases in long-dated debt issues. The European Central Bank must keep its options open for interest rate moves at upcoming meetings, ECB policymaker Francois Villeroy de Galhau said during a conference on Wednesday. Another ECB policymaker, Joachim Nagel, said the ECB should be vigilant on inflation, but not complacent.

Money markets priced in an about 40% chance of a 25-basis-point ECB rate cut by September from over 80% in mid-October at the height of U.S.-China trade tensions. They also projected the ECB deposit rate to be around its current 2% level in December 2026.

Germany's 2-year yields, more sensitive to expectations for ECB policy rate outlook, were roughly unchanged at 2.0%.

The yield gap between safe-haven Bunds and 10-year French government bonds - a market gauge of the risk premium investors demand to hold French debt - was at 79.50. Concerns over France's fiscal trajectory drove it to around 88 bps in early October.

(Reporting by Stefano Rebaudo; editing by Ros Russell)