Euro zone bond yields edge down, tariffs stay in focus

Jan 23 (Reuters) - Euro zone bond yields edged down slightly on Thursday, while investors awaited more certainty around U.S. President Donald Trump's trade policies and looked ahead to next week's central bank meetings.

Trump did not immediately impose tariffs on U.S. imports on his first day back in the White House, but said he is mulling tariffs of around 25% on Canada and Mexico and around 10% on China from Feb. 1. He has also vowed to impose duties on European Union imports.

Germany's 10-year bond yield DE10YT=RR, the benchmark for the euro zone bloc, fell one basis point (bp) to 2.488%. Yields move inversely to prices.

Italy's 10-year yield IT10YT=RR was less than one bp lower 3.593%, while the gap between Italian and German yields DE10IT10=RR stood at 109.7 bps.

Markets expect the European Central Bank will cut interest rates with 25 bps next week, while the U.S. Federal Reserve is seen holding rates steady.

Germany's two-year bond yield DE2YT=RR, which is more sensitive to ECB rate expectations, was 1.5 bp lower 2.22%.