Euro zone bond yields steady ahead of U.S. inflation data

LONDON, Sept 26 (Reuters) - Euro zone government bond yields were little changed on Friday but were set to notch weekly gains as investors turned their focus to the release of the Federal Reserve's preferred inflation gauge later in the day.

Upbeat U.S. economic data on Thursday triggered a selloff in Treasuries, pushing the benchmark 10-year yield US10YT=RR up nearly 5 basis points to 4.1950% — its highest in three weeks, as traders scaled back their bets on a rate cut from the Fed next month.

By Friday, Germany's 10-year bond yield DE10YT=RR, the benchmark for the euro zone, was steady at 2.7764%, having ended Thursday's session up 2.5 basis points.

On Friday, the 10-year Treasury yield US10YT=RR was up another 1 basis point at 4.1872%, while the 30-year yield US30YT=RR added 1.9 bps to 4.7724%.

The personal consumption expenditures (PCE) price index, due later on Friday, is expected to provide a clearer steer on the Fed's policy outlook.

In Europe, French unions are planning fresh protests on October 2 to pressure new Prime Minister Sebastien Lecornu into shelving a fiscal austerity programme.

France's 10-year yield FR10YT=RR was flat at 3.6012%, leaving the gap between German and French yields — a closely watched risk premium — wider at 82.54 bps.

Italy's 10-year bond yield IT10YT=RR was also stable at 3.6439%. On the long end, Germany's 30-year yield DE30YT=RR inched up 1 bp to 3.3573%.