Euro zone bond yields steady as traders weigh Lagarde exit report

LONDON, Feb 18 (Reuters) - Euro zone bond yields held steady around multi-month lows on Wednesday as investors mulled a report that said European Central Bank President Christine Lagarde plans to leave the role early.

Germany's 10-year bond yield DE10YT=RR was last flat at 2.743%, just above Monday's 2 1/2-month low of 2.725%. Yields move inversely to prices.

European government bonds have rallied - and yields have fallen - partly in sympathy with U.S. Treasuries, with soft U.S. inflation data on Friday and worries about AI disruption in stocks boosting the country's government bonds.

Euro zone inflation also appears under control and the ECB is expected to hold interest rates for the rest of the year.

With little in the way of economic data, focus on Wednesday turned to a Financial Times report that said ECB chief Lagarde plans to leave her job before next year's French presidential election.

The FT said Lagarde has not yet decided on the timing of her departure but was keen on French President Emmanuel Macron - who cannot run for a third term in the 2027 French presidential election - and German Chancellor Friedrich Merz being the key deciders in who succeeds her.

An ECB spokesperson said Lagarde was focused on her job and had not taken any decision regarding the end of her term.

Euro zone bond markets showed little reaction, with Italy's 10-year bond yield IT10YT=RR also roughly flat at 3.356%, around its lowest since October.

Germany's 2-year bond yield DE2YT=RR, which is sensitive to ECB rate expectations, was flat at 2.054%.

"We expect a limited impact of the new ECB president as EU leaders historically have aimed to strike a balance within the ECB's executive board between doves and hawks," said Sofie Liv Petry, assistant analyst at Danske Bank.