Euro zone bond yields choppy, fiscal jitters persist for long-end

Sept 3 (Reuters) - Long-dated euro zone bond yields were choppy on Wednesday, lingering near multi-year highs, as investors fretted over the sustainability of government debt levels at the start of a month of seasonally heavy debt supply.

Germany's 30-year yield DE30YT=RR rose to a 14-year high of 3.4340% before reversing course, and was last a touch lower on the day at 3.3979%.

While euro zone bond yields had kicked off the session on a steady note, the U.S. 30-year Treasury yield's US30YT=RR fleeting rise to 5% exerted pressure that dissipated as the long-tenor U.S. yield eased below its highest level since July.

Other regional long-dated bond yields, including in France FR30YT=RR and Italy IT30YT=RR, tracked their German counterpart's fitful moves and were last a little lower at 4.49% and 4.65%, respectively.

Germany's 10-year yield, the benchmark for euro zone bonds, also nudged down to 2.77%. DE10YT=RR

Investors are bracing for heavy bond supply in September and October from Germany, Japan and the U.S., while also confronting political worries in France and Japan. Societe Generale expects more than 100 billion euros ($117 billion) in European bond issuance in September and October.

French Finance Minister Eric Lombard said the minority government would have to compromise on plans to cut the budget deficit if Prime Minister Francois Bayrou is toppled in a confidence vote on September 8.

"To say that event risk for France and OATs is high in the coming days is something of an understatement. The vote on the 8th September appears to be a done deal in that Bayrou’s government will fall. What ensues will be key to dictating the tone of OAT spreads," said Peter Goves, head of developed market debt sovereign research at MFS Investment Management

Meanwhile, jitters about the UK's ability to keep its finances under control pushed up its 30-year borrowing costs UK30YT=RR their highest level since 1998.

British finance minister Rachel Reeves will deliver her annual budget on November 26, her department said on Wednesday.

In the near-term, investors focus is also on key U.S. labour market data due on Friday that is expected to influence expectations of a rate cut by the U.S. Federal Reserve this month.

Money markets are currently pricing in a more than 90% chance of a 25-basis-point cut by the Fed, per CME's FedWatch tool.