Euro zone government bond yields edge up, await US data

By Stefano Rebaudo

Dec 4 (Reuters) - Euro zone government bond yields edged higher on Thursday, tracking U.S. Treasuries, as investors focused on the Federal Reserve's policy outlook ahead of key U.S. jobs data later in the day.

Germany's 10-year yields, the euro area's benchmark, were up 0.5 basis points (bps) to 2.75%.

Investors are closely watching Ukraine peace talks, as a deal could ease inflation pressures and support growth, potentially shaping the European Central Bank's policy path.

Still, markets remain cautious about betting on a comprehensive and credible agreement being reached soon. Germany's 10-year yield rose 6 basis points on Monday, tracking moves in U.S. Treasuries, after edging higher earlier in the session before U.S. markets opened. Record-high yields on 30-year Japanese bonds helped support demand at an auction of the debt on Thursday at a time when the government plans massive debt-fuelled stimulus.

U.S. borrowing costs remain in the driving seat, as the ECB is seen holding rates well into 2027. Benchmark 10-year U.S. Treasuries yields were up 2.5 bps at 4.08% after falling 3 bps on Wednesday as data showed a surprise decrease in private sector payrolls in November.

Germany's 2-year yields, more sensitive to expectations for the ECB policy rate outlook, rose one bp to 2.06%. They hit 2.08% on Monday, their highest level since late March. (Reporting by Stefano Rebaudo; Editing by Toby Chopra)