LONDON: Euro zone bond yields edged up on Friday as investors waited to see whether jobs data from the United States would reignite expectations for a near-term interest rate hike in the world's largest economy.
Steadying from sharp falls on Thursday after the Bank of England restarted monetary easing to limit the impact of economic headwinds from Britain's vote to leave the European Union, focus has quickly shifted to July's US nonfarm payrolls due at 1230GMT.
Economists polled by Reuters expect 180,000 new jobs to have been created last month. While that would be a step down from June's 287,000 surge, July's expected gain would still be above the average monthly advance of 171,500 jobs over the first half of the year.
The U.S Federal Reserve is the only central bank in the developed world on a path to tighter monetary policy, with Britain on Thursday joining mainland Europe, Japan and Australia in propping up growth and inflation with a looser approach.
But the US government's advance reading of second-quarter growth came in at just 1.2 percent last Friday, while on Thursday the Atlanta Federal Reserve's "GDP Now" forecast model showed the US economy likely expanded at a 3.7 percent rate in the third quarter.
"The US jobs barometer should enter calmer waters again and the new figure should be roughly in line with the average for the year to date," DZ Bank strategist Christian Lenk said.
"Nonetheless, even this figure is unlikely to entirely convince the FOMC of the necessity of another rate hike, especially in light of last week's weak US GDP for the second quarter."
German 10-year yields -- the euro zone benchmark -- rose 1 basis point to minus 0.15 percent, having fallen some 5 basis points on Thursday in the wake of the BOE's package of rate cuts and asset purchases.
Its most recently issued 10-year debt, a zero coupon bond maturing in August 2026, yielded minus 0.9 percent, down 1 bps, according to Reuters data.
Most other euro zone yields were flat or slightly higher on the day.
The US central bank hiked interest rates in December for the first time in nearly a decade, but has held them steady since then amid concerns about persistently low inflation.
Most economists expect another rate hike at the end of this year, although money markets have priced in just a 30 percent chance of that happening, according to CME's FedWatch tool.
Earlier this week, Chicago Fed President Charles Evans offered a lukewarm endorsement of an interest rate increase later this year, despite his worry that inflation is still undershooting the US central bank's 2 percent target.
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