LONDON, Feb 29 (Reuters) - Euro zone bond yields were struggling for direction on Thursday after mixed inflation data from Spain and France, as markets awaited more prices data from Germany and the U.S. that could help determine the timing of rate cuts from major central banks.

French consumer prices rose 3.1% year-on-year in February, down from the 3.4% figure recorded in January although slightly higher than forecasts in a Reuters poll of 3%.

It was a similar picture in Spain, where annual inflation dropped to 2.9% in February, down from 3.5% in January although in line with expectations.

"Inflation is still a little bit higher than everybody would have expected a few months ago," said Anders Svendsen, chief analyst at Nordea.

"If you look at the January numbers, the monthly increases were quite high and if that's the case again in February it will challenge the narrative of gradually falling inflation."

Consumer prices data from German states is released through the morning before the nationwide figure at 1300 GMT, while figures for the whole euro zone are released on Friday.

Germany's 10-year yield, the euro area's benchmark, was last up 0.5 basis points (bps) at 2.466%.

The two-year yield, which is more sensitive to changes in interest rate expectations, was little changed at 2.9286%.

Markets expect the European Central Bank to begin cutting interest rates in June, having previously priced the first move in the Spring.

Nordea's Svendsen says the repricing of rate cut expectations -- which has seen markets trim expectations for cuts in 2024 to around 90 bps from around 150 bps at the start of the year -- may be close to an end.

"I think it's difficult to price down to less than three rate cuts given that the ECB is fixated on June and it will be hard to see them go slower than once per quarter," Svendsen said.

"I think we are close to the end of the front-end sell-off and in time you'll see people interested in buying bonds again, especially in the short-end."

Elsewhere, Reuters reported that the ECB will continue putting a "floor" under market interest rates in the years to come, but banks will play a greater role in deciding how much liquidity they want, citing four sources.

Italy's 10-year yield, the benchmark for the euro zone periphery, was little changed at 3.892%.

10-year bond yields in France and Spain were also hovering around unchanged on the day. (Reporting by Samuel Indyk Editing by Keith Weir)