German bond yields rise to one-week high, focus on inflation

Updates for European afternoon trading

LONDON, Feb 12 (Reuters) - German bond yields climbed again on Wednesday after rising by their most in almost four months the previous day as markets digested tariff developments, comments from the U.S. Federal Reserve chair, and a rise in energy prices.

The move was relatively muted as investors waited for U.S. consumer price index inflation, due at 1330 GMT, which could influence the Fed and have knock-on effects for Europe's bond markets.

Germany's 10-year bund yield DE10YT=RR was last up 2 basis points (bp) at 2.454%, the highest since Feb. 3, after rising 7 bps on Tuesday.

Investors were also bracing for more tariff announcements, with U.S. President Donald Trump's trade advisers finalising plans on Wednesday for the reciprocal tariffs he has vowed to impose on every country that charges duties on U.S. imports.

Commerzbank's head of interest rates strategy Michael Leister said U.S. inflation data, tariffs and heavy European bond issuance should all continue to weigh on euro zone debt on Wednesday.

"We stick with our short bias in bunds," he added.

It was set to be another day of heavy bond issuance in Europe, with France and Germany among the countries coming to the market.

Italy and the European Union both sold bonds via syndications on Tuesday to strong demand, as Germany and the Netherlands also issued debt.

Italy's 10-year yield IT10YT=RR was up 1 bp at 3.539%, and the gap between Italian and German bond yields DE10IT10=RR narrowed 1 bp to 109 bps.

Germany's two-year bond yield DE2YT=RR, which is more sensitive to European Central Bank rate expectations, was 3 bps higher at 2.117%.

The U.S. data is expected to show inflation held steady at 2.9% in January, and month-on-month inflation slowed to 0.3% from 0.4% in December.

Fed Chair Jerome Powell said on Tuesday the central bank was in no hurry to cut rates again thanks to a strong economy.

Traders expect more rate cuts from the ECB this year, reflecting a much weaker economy. Money markets last pointed to around 78 bps of further cuts this year, down from around 88 bps priced in on Monday.