Euro zone yields hold near highest in over a decade before FOMC minutes

By Stefano Rebaudo Feb 22 (Reuters) - Euro zone government bond yields held near their highest levels in over a decade on expectations for further monetary tightening on Wednesday as investors awaited minutes of the latest Federal Reserve policy meeting. Recent data from the United States and euro area has shown surprising resilience, while the growth outlook in China is more robust and less uncertain than expected just a few months ago. At the same time, central banks' campaign against inflation has a way to go as consumer spending on services and tight labour markets keep price pressures high. Germany's 10-year yield , the benchmark for the single currency bloc, was down 1.5 basis points (bps) to 2.522%, holding within sight of its early January peak of 2.569%, which was its highest level since August 2011. The Federal Open Market Committee will issue minutes from its Jan. 31-Feb. 1, 2023, meeting at 1900 GMT. Euro area wages are catching up after rapid inflation eroded their purchasing power, European Central Bank President Christine Lagarde said, adding the central bank was monitoring wage growth "very, very closely." New Zealand's central bank raised interest rates by 50 basis points to a more than 14-year high of 4.75% on Wednesday and said it expected to keep tightening further. "The ongoing rotation of consumer spending is fueling tight labour markets and hot services inflation," Citi analysts led by Nathan Sheets said. "By our reckoning, global headline inflation is still running somewhere in the 6-7% range, well above central bank targets," they added. Germany's 2-year bond yield , the most sensitive to policy rate expectations, briefly hit a 14-year high of 2.958%. It was last down 1 bps at 2.523. Italy's 2-year yield was down 0.5 bps to 3.566%, after hitting a new 10-1/2 year high at 3.572% on Tuesday. The business climate in France improved slightly in February compared to January. German consumer prices rose by 9.2% in January, confirming preliminary data.

Italy's 10-year yield was down 0.5 bps at 4.461% after hitting a fresh six-week high of 4.486% on Tuesday. The spread between Italian and German 10-year yields was at 192 bps, its highest level since Feb 2. (Reporting by Stefano Rebaudo Editing by Christina Fincher)