LONDON, May 15 (Reuters) - Euro zone bond yields dropped on Wednesday after U.S. consumer prices increased by less than expected in April.
The U.S. consumer price index rose 0.3% last month after advancing 0.4% in March and February, the Labor Department's Bureau of Labor Statistics (BLS) said on Wednesday.
In the 12 months through April, the CPI increased 3.4% after climbing 3.5% in March. Economists polled by Reuters had forecast the CPI gaining 0.4% on the month and advancing 3.4% year-on-year.
Germany's 10-year yield, the benchmark for the euro zone bloc, was last down 10 basis points at 2.43%, extending a decline ahead of the data, and putting it on track for its biggest daily drop since April 12.
Euro zone yields are highly responsive to U.S. data given investor expectations that policy makers at the European Central Bank will not wish to cut rates substantially while the U.S. Federal Reserve remains on hold, and the global nature of some aspects of inflation.
An ECB rate cut in June is seen as highly likely but its path beyond that remains uncertain. Markets slightly increased expectations of the scale of ECB cuts this year after the data and are close to pricing in three 25 basis point cuts in 2024.
Italy's 10-year yield was lower by 14 bps at 3.76%.
The 10 year U.S. Treasury yield was last down 7 bps at 4.37%, its lowest in a month. (Reporting by Samuel Indyk; Editing by Andrew Heavens, Emelia Sithole-Matarise and Alison Williams)
