Long-dated euro zone yields set for biggest monthly jump since March

LONDON, Aug 29 (Reuters) - Euro zone bond yields nudged up on Friday, and 30-year bond yields were set for their biggest monthly jump in five months, as long-dated debt remained under pressure across developed economies.

Long-dated bonds have repeatedly taken a hit this year as investors remain concerned about the sustainability of high government debt levels.

Germany's 30-year yield DE30YT=RR, which touched its highest since 2011 earlier in August, has risen 12 basis points this month, setting it for its biggest monthly jump since March, when a historic move towards looser fiscal policy sent bond yields surging. Bond yields move inversely to prices.

It was up a further 2 bps on Friday at 3.33%.

The biggest jump came in France, where yields rose 27 bps, also the biggest monthly jump since March.

French bonds, which were shaken this week by Prime Minister Francois Bayrou's move to call a confidence vote on September 8 that he may lose, were calm on Friday. The closely watched spread France pays over Germany for 10-year debt held at 79 bps DE10FR10=RR.

France's 10-year yield rose nearly 2 bps to 3.50%, but Germany's rose a similar amount to 2.71% FR10YT=RR, DE10YT=RR.

"(French) OATs are not out of the woods and we expect the 75-85bp range in the 10Y OAT-Bund spread to hold for now," said analysts at Mizuho.

They expect Bayrou to lose the confidence vote, "and France will – for the third time in 12 months – find itself without a prime minister or a national budget".

Italy's 10-year yield was also broadly in line with peers, up 3 bps at 3.60% IT10YT=RR.

Investors were also digesting European national inflation data, though these numbers are less important for markets than they were a year ago, with the euro zone figure around the European Central Bank's 2% target and the ECB expected to hold rates steady in the coming months.

German inflation accelerated more than expected in August, preliminary data showed, though it was still around target at 2.1%. French prices rose slightly less than expected.

ECB-sensitive two-year yields in Europe were little changed, with Germany's at 1.93% DE2YT=RR.

U.S. PCE inflation, the Federal Reserve's preferred gauge of price pressures, also passed with little impact on markets.

In the 12 months through July, the PCE Price Index rose 2.6%, matching the gain in June.

Traders are currently pricing in around a 90% chance of a rate cut in September, up from 63% a month earlier 0#USDIRPR.