Euro zone government bond yields hit fresh multi-month highs before US data

Jan 10 (Reuters) - Euro zone government bond yields hit fresh multi-month highs on Friday as investors awaited U.S. jobs data later in the session, which could provide clues about the Federal Reserve's monetary policy path.

Borrowing costs have risen as strong economic figures and the prospect of U.S. tariffs have fuelled inflation fears on both sides of the Atlantic.

Germany's 10-year government bond yield DE10YT=RR was up 3 basis points (bps) at 2.559%, its highest since July 10.

A key market gauge of long-term inflation expectations EUIL5YF5Y=R was at around 2.11%, having dropped below 2% in early December.

Germany's 2-year yield DE2YT=RR, which is more sensitive to expectations for European Central Bank rates, rose one bp to 2.23%.

Markets priced in an ECB deposit facility rate at 2.15% in July 2025, from 1.95% early this year. EURESTECBM5X6=ICAP The depo rate is 3%.

The gap between French and German bond yields - a gauge of the premium investors demand to hold French debt – was at 85 bps. DE10FR10=RR

Italy's 10-year yield IT10YT=RR rose 3 bps to 3.74%, after hitting 3.76%, its highest since Nov. 7. The gap between Italian and German yields DE10IT10=RR stood at 115 bps.

(Reporting by Stefano Rebaudo, editing by Christina Fincher)

((stefano.rebaudo@tr.com))