Euro zone bond yields steady as ECB expected to keep rates on hold

By Sophie Kiderlin

LONDON, Feb 5 (Reuters) - Euro zone bond yields were steady on Thursday against a backdrop of fragile global markets and ahead of a European Central Bank interest rate decision which investors widely ?expect will keep rates unchanged.

Germany's 10-year yield, the benchmark for the euro zone, ?were last little changed at 2.8692%.

Markets were last ?pricing in an almost 100% chance of ?the ECB leaving ?interest rates where they are at its policy meeting later in the ?day. Money market traders were ?also not anticipating any changes to rates throughout 2026, as inflation is hovering around the central ?bank's 2% target and growth appears ?solid.

German ?2-year yields, which are sensitive to interest rate expectations, were last steady at 2.0788%.

Euro zone bloc-wide inflation data ?released Wednesday showed that headline inflation eased to 1.7% in January.

Even so, recent euro strength has stoked concerns about potential deflationary pressures growing and pressuring the ECB to trim interest rates.

Investors will therefore be paying close ?attention ?to the language used in the ECB's statement, as well as President Christine Lagarde's post-meeting remarks and press ?conference, to assess any shift in tone regarding the inflation outlook.

They will however have to wait until the March meeting for updated detailed economic projections from the central bank.

Elsewhere, broader markets were shaky on Thursday as worries about the cost of ?AI investment shook up equity markets, while bitcoin pulled back amid a rout in cryptocurrencies and silver tumbled again, just days on from a ?sharp selloff. (Reporting by Sophie Kiderlin, editing by Philippa Fletcher)