RPT-Euro zone yields dip as Trump promises reciprocal tariffs

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LONDON, Feb 13 (Reuters) - Euro zone bond yields fell on Thursday after U.S. President Donald Trump said he planned to unveil reciprocal tariffs later in the day.

Trump gave no details about his latest tariff plan, which could take aim at every country that charges duties on U.S. imports.

Traders were also digesting comments by the U.S. president promising a swift end to the Ukraine war.

Trump separately discussed the war on Wednesday with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy, and told U.S. officials to begin talks on ending the nearly three-year-long conflict.

Oil LCOc1 and European natural gas prices fell TFMBMc1 on Wednesday and Thursday, cooling concerns about inflation and helping pull yields lower.

Germany's 10-year bond yield DE10YT=RR, the benchmark for the euro zone, was last down 6 basis points (bps) at 2.419%. It rose 12 bps over the previous two sessions to its highest in almost two weeks, partly driven by strong U.S. inflation data on Wednesday. Yields move inversely to prices.

Data on Wednesday showed U.S. producer prices increased solidly in January , offering more evidence inflation was picking up again and strengthening financial market views that the Federal Reserve would not be cutting interest rates before the second half of the year.

Meanwhile, weak euro zone industrial data added to the downward pressure on yields, with figures on Thursday showing production shrank more than expected in December.

Hauke Siemssen, rates strategist at Commerzbank, said bond prices were stabilising after coming under pressure in part due to large amounts of issuance in the last few days, including syndications from the European Union, France and Italy.

He said the potential for German bonds to rally on the back of Ukraine peace talks is limited, given that the improvement in investor sentiment would tend to favour stocks.

"Bunds look set to enter calmer waters with the duration-intensive euro (bond) supply out of the way for the rest of the week and the data calendar also thinning out," he said. "Duration" denotes longer-dated bonds.

The two-year German bond yield DE2YT=RR, which is more sensitive to European Central Bank interest rate expectations, was 5 bps lower at 2.087% after rising 11 bps over the last two sessions.

Traders on Thursday very slightly added to their bets on further ECB cuts this year and now see around 77 bps of reductions by the end of 2025.

Italy's 10-year yield IT10YT=RR was down 6 bps at 3.502%, and the gap between Italian and German bond yields DE10IT10=RR narrowed 3 bps to 105 bps.