European bond yields jump again in early trading

LONDON, March 3 (Reuters) - Euro zone bond yields rose further at the open, extending Monday's moves as the air war in the Middle East entered its fourth day, driving oil prices higher and rekindling inflation fears.

Germany's 10-year yield, the benchmark for the euro zone, rose 5 basis points in the first 30 minutes of trading to 2.76%. It rose 5.5 bps on Monday, its biggest one-day gain in nearly three months. DE10YT=RR

The euro zone imports the bulk of its oil and gas, and Brent crude rose 3.25% to $80.26 a barrel on Tuesday. LCoc1 Benchmark European wholesale gas prices closed around 35-40% higher on Monday. O/R NG/EU

If sustained, that would send inflation in the currency block higher, and put pressure on the European Central Bank to turn more hawkish.

While the ECB looks set to remain on hold in the coming months, markets had seen around a 40% chance of a rate cut by year end. Now they see around a 25% chance of an interest rate hike this year.

Italy's 10-year yield rose further, up nearly 6 bps to 3.41%. IT10YT=RR