Euro zone yields edge higher as investors eye ECB cut, tariff news

LONDON, June 2 (Reuters) - Longer-dated euro zone bond yields edged higher on Monday as traders braced for a widely expected ECB rate cut later this week, while they remained sensitive to tariff headlines.

The European Central Bank is tipped to cut its key rate to 2% on Thursday, its eighth move this cycle. Traders reckon a pause will then follow as the economy holds up better than anticipated and longer-term inflation worries creep back.

Traders' focus is on economic data ahead of the meeting, with euro zone inflation expected to drop to 2% on Tuesday, following final business activity data due on Monday.

U.S. President Donald Trump said on Friday he planned to increase tariffs on imported steel and aluminum to 50% from 25%, ratcheting up pressure on global steel producers and deepening his trade war.

On Monday, Germany's 10-year yield DE10YT=RR, the benchmark for the euro area, was last up 2 bps to 2.53%.

Its 30-year yield DE30YT=RR was up 3 bps to 3.03%.

Traders were also cautious around a 10-year Japanese auction taking place on Tuesday, which comes following weak demand for long-dated auctions in May.

The closely watched gap between Italian and German 10-year bond yields widened to 97 bps. Italian 10-year yields IT10YT=RR were up 3 bps to 3.52%.