European bond yields tick up as traders gear up for Jackson Hole

LONDON, Aug 21 (Reuters) - Euro zone bond yields inched higher on Thursday as markets gear up for the Federal Reserve's annual symposium in Jackson Hole and await Euro zone flash PMIs.

German 10-year yields DE10YT=RR were up nearly 2 basis points at 2.73%, while rate-sensitive 2-year yields DE2YT=RR were flat at 1.94%.

Fed Chair Jerome Powell's speech on Friday will be key as traders assess the chances of a September rate cut by the U.S. central bank.

Money markets currently see an 80% chance of a 25 bps rate cut at the Fed's next session in September. IRPR

Any changes in Fed rate expectations often influence other bond markets given the scale of the U.S. economy, the world's largest.

Questions about the Fed's independence have resurfaced after Trump on Wednesday called on Fed Governor Lisa Cook to resign on the basis of allegations made by one of his political allies over mortgages she holds.

Meanwhile, traders are awaiting euro zone flash PMIs for August, which RBC economists say will be a major test of the impact tariffs are having on the economy.

"We think the PMIs will weaken in August, but not by enough to seriously question the view that tariffs will not interrupt the euro area’s growth recovery," they wrote in a note.

But early data from France showed business activity there outperformed expectations, edging closer to growth and at its highest in a year.

Another key test will be the release of a euro zone consumer confidence survey for August which follows later on Thursday.

In the UK, borrowing data showed Britain's public borrowing in the financial year so far has matched the forecasts that underpin the government's tax and spending plans. This offered a bit of breathing space to finance minister Rachel Reeves before bigger challenges later this year.

Italy's 10-year yield was nearly 3 bps higher at 3.58%. IT10YT=RR