Euro zone bond yields edge up with geopolitics, US data in focus

(Updates throughout, adds strategist comments and latest news)

LONDON, April 21 (Reuters) - Euro zone government bond yields edged higher on Tuesday as traders weighed the potential for U.S.-Iranian peace talks and comments from President Donald Trump's pick to lead the Federal Reserve, Kevin Warsh, at his Senate confirmation hearing.

Yields rose towards the end of the European session after trading sideways for most of the day, taking direction from U.S. Treasuries, which fell after strong U.S. retail sales data.

"We've had a bit of a spike in oil prices and then everyone is watching the U.S. data as well," said Evelyne Gomez-Liechti, multi-asset strategist at Mizuho, pointing to the latest headlines on the U.S.-Iran war as well.

"With the ceasefire ending tonight, the market is starting to be a bit more nervous about it," said Gomez-Liechti.

Trump said he did not want to extend the ceasefire and that the U.S. military was "raring to go" if any negotiations failed.

Germany's 10-year yield, the benchmark for the euro zone, rose 3 basis points to 3.0055%.

Germany's interest-rate-sensitive two-year yield rose 6 bps to 2.5133%, while super-long-dated 30-year yields were flat at 3.5521%.

Bond markets in March and early April swung sharply on headlines related to the Middle East conflict, as investors feared persistently high energy prices would force central banks to tighten policy to prevent a broader surge in inflation.

Investors also tuned into Warsh's comments.

He told U.S. senators he would make monetary policy decisions independent of any advice or pressure from Trump, saying success in keeping inflation low was the "plot armor" that would insulate the central bank from criticism.

Trump has openly criticised current Fed Chair Jerome Powell for not lowering rates more.

Elsewhere, data earlier showed German investor morale sank to its lowest in more than three years, while European Central Bank Vice-President Luis de Guindos said policymakers should be cautious and focus on whether higher oil and gas prices were feeding through into other prices.

Markets continue to price a very small chance of an ECB rate hike later this month, though they see a 25-bp increase as more likely than not by June and are close to fully pricing two such moves by year end. (Reporting by Alun John. Editing by Muralikumar Anantharaman and Mark Potter)