Euro zone yields hold steady, US jobs data in focus

Feb 7 (Reuters) - Euro zone government bond yields held steady on Friday as investors awaited U.S. jobs data as well as updated estimates for the euro area's "neutral rate" of interest from the European Central Bank.

U.S. nonfarm payrolls, due out later in the day, are expected to have increased by 170,000 jobs last month after surging 256,000 in December, a Reuters poll of economists showed.

Germany's 10-year bond yield DE10YT=RR, the benchmark for the euro zone bloc, was little changed at 2.375%. On Wednesday the yield touched a one-month low at 2.345%.

Yields move inversely to prices.

Investors will also be watching updated estimates from the ECB for the neutral interest rate for the euro area, or the interest rate level that keeps the economy in balance with full employment and stable inflation. This level is usually the rate target for central banks.

Germany's two-year bond yield DE2YT=RR, which is more sensitive to ECB rate expectations, was up 0.5 basis points (bps) at 2.061%.

Italy's 10-year yield IT10YT=RR held steady at 3.442%, and the gap between Italian and German yields DE10IT10=RR stood at 105.9 bps.