Euro zone bond yields steady as oil prices rise on Trump comments

By Sophie Kiderlin and Harry Robertson

LONDON, Nov 12 (Reuters) - Euro zone bond yields were little changed on Thursday after reversing an earlier fall following comments from US President Donald Trump that the US does not need a deal with Iran, which nudged up oil prices.

Germany's 10-year government bond yield , the benchmark for the euro zone, was last flat at 3.322%. It was on track for a weekly rise of around 7 basis points after falling for four consecutive weeks.

"We don’t need a deal with Iran. Those days have long since passed. We’ve got their money, Hundreds of Billions of Dollars, and we’ve got their Strait!" Trump wrote on social media.

Brent crude oil rose 1% to $94 a barrel, after falling to its lowest since late August earlier this week in the wake of the US midterms, which delivered a rebuke to Trump and his conflict in the Middle East.

US 10-year Treasury yields rose 8 bps to 5.07%. Tech stocks in the US initially fell after Nvidia CEO Jensen Huang resigned. They then rebounded, with the Nasdaq 100 up 0.3% .NDX.

A hotter-than-expected US consumer inflation print on Tuesday had sent Treasury yields higher and prompted traders to add to bets for a December rate hike from the Federal Reserve.

The moves spilled over from the US into Europe on Tuesday.

Fed policymakers earlier this week opened the door to a quicker pace of rate hikes as they sounded the alarm on inflation.

The European Central Bank is also expected to hike interest rates in December, with money markets pricing in around an 80% chance of a 25-basis-point increase then. Two such hikes from the ECB are being fully priced in by money markets by mid-2027.

Germany's 2-year government bond yield, which is more sensitive to rate expectations, was flat at 3.114%. It was on track for a 15-bp weekly rise after easing for the previous four weeks .

Erik Liem, rate strategist at Commerzbank, said comments from Fed speakers will remain in focus.

"If they were to add to their recent hawkish comments, it will be intriguing to see the spillovers into ECB expectations," he said.

Most economists polled by Reuters are expecting a December increase to mark the end of this hiking cycle for the ECB, although more than a third expect an additional increase in early 2027.

Meanwhile, Italy sold €7.25 billion of medium- and long-term bonds to decent demand on Thursday.

Italy's 10-year government bond yield was last up 1 bp to 4.371% .