LONDON, Nov 4 (Reuters) - Euro zone government bond yields fell on Friday but were set for another weekly gain, as investors awaited the latest U.S. employment data.
Global yields have risen sharply this week after the U.S. Federal Reserve and the European Central Bank (ECB) made clear that the fight against inflation is far from over. Another record-high euro zone inflation print on Monday added to investors' fears that interest rates will keep marching higher.
Germany's 10-year yield, the benchmark for borrowing costs in the euro zone, was down 3 basis points (bps) to 2.214% on Friday, but was nonetheless more than 12 bps higher for the week.
The German 2-year yield was 2 bps lower at 2.067% but was also higher for the week. Yields move inversely to prices.
The slip on Friday was natural after a sharp rise the previous day following the Fed's aggressive rate hike and messaging at its meeting on Wednesday, said Sebastiano Chiodino, head of fixed income at Generali Insurance Asset Management.
"I would say they're just intraday movements," he said. "We are coming off a major week."
Eagerly awaited data out at 1230 GMT is expected to show the U.S. jobs market added 200,000 jobs in October, down from 263,000 in September.
A stronger-than-expected reading would add to the impetus for the Fed to keep hiking interest rates, in turn putting pressure on the ECB.
"This is clearly a pivotal number for the Fed, needless to say, and it will be something that also the European market will watch very closely," Chiodino said.
Italy's 10-year yield fell 6 bps on Friday to 4.36%, although it was on track for its biggest weekly gain since mid-September, having risen 20 bps since Monday.
The Fed hiked interest rates by 75 bps for the fourth meeting running on Wednesday and said it was far from done.
It came after the ECB last week also hiked by 75 bps, days before data showed euro zone inflation hit a record high of 10.7% in October.
ECB President Christine Lagarde said inflation is still "way too high" and that there is "still a way to go" to bring it down, in an interview on Latvian television on Thursday.
The gap between the German and the Italian 10-year yield slipped 3 bps to 213.2 bps.
The Bank of England on Thursday struck a different tone to the Fed, raising rates by 75 bps but signalling that future rate rises would be lower than traders anticipate. (Editing by Jacqueline Wong)
