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Euro zone bond yields edge up, eyes on ECB, U.S. jobs data

·2 min read

Dec 3 (Reuters) - Euro zone bond yields edged up on Friday as investors awaited speakers from the European Central Bank and U.S. jobs data at the end of a volatile week which featured sharp falls linked to fears of the new Omicron variant of the coronavirus.

Yields also saw upward pressures during the week as the U.S. Federal Reserve signalled it could end bond purchases earlier than previously anticipated amid concerns over higher inflation.

Germany's 10-year yield, the benchmark for the bloc, was up 1 basis point to -0.36% by 0813 GMT on Friday after a sharp fall on Thursday that pushed it to the lowest since September.

Italian 10-year yields were up less than a basis point to 0.97%.

ECB President Christine Lagarde will speak at 0830 GMT, followed by chief economist Philip Lane at 1300 GMT. They will also be watched for any comments on the impact the Omicron variant may have on the ECB's policy outlook and inflation.

"Markets remain torn between growth concerns related to Omicron anxiety and central bank concerns related to inflation," said Christoph Rieger.

"Today's agenda could add weight to the latter in the U.S. while Lagarde and Lane could attempt to counter the risk of spill-over."

Sources at the bank said this week that a growing number of ECB governors are considering delaying part of a decision on the bank's stimulus plans as the outlook has been muddied by the new variant and high inflation.

The U.S. non-farm payrolls data release will follow at 1330 GMT, which a Reuters poll expects to add another 550,000 jobs in November, up from 531,000 in October.

Investors will also be watching for whether the labour participation rate improves, which would remove some overheating pressure.

"If participation continues to fall, nervousness should increase as the Fed clearly indicate less tolerance for high inflation, which is no longer judged to be transitory," said Lara Mohtadi, analyst at SEB.

Following the sesion close Fitch Rating will review Italy's credit rating, which it ranks one notch above junk with a stable outlook.

(Reporting by Yoruk Bahceli Editing by Gareth Jones)

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