(Updates at 1210 GMT)
By Alun John
LONDON, Jan 10 (Reuters) - Euro zone government long-dated bond yields paused on Wednesday, taking a break from this year's climb, as traders kept an eye on remarks by European Central Bank policy makers for clues on how soon they will start cutting interest rates.
Germany's 10-year bond yield was last flat on the day at 2.19%.
The euro zone benchmark yield dropped around 80 bps in November and December but has risen more than 15 bps in January, as traders first moved to price in significant rate cuts in Europe and the United States in 2024 on the back of slowing inflation, and then, this year, reassessed those calls.
Market pricing now reflects around a 40% chance of the European Central Bank cutting interest rates in March.
Such a move was fully priced in late December, but a sense that pricing had gone too far, combined with stronger-than-expected employment data in Europe and the United States, has caused traders to reassess.
A deluge of supply has also weighed on bond prices, which move inversely to yields, though so far investors seem willing to absorb the new issuance.
Spain was set to raise 15 billion euros from a 10-year bond sale on Wednesday, seeing 137 billion euros ($142.36 billion) of investor demand, Reuters reported citing a memo from a lead manager, the highest level ever.
The main event this week that could cause a major reassessment of the timing of interest rate cuts is U.S. consumer inflation data due Thursday, and markets are in something of a holding pattern until then.
"Today’s data calendar is certainly only sparsely stocked. The sole item which is of greater interest (is) French industrial production readings for November," said analysts at DZ bank in a morning note to clients.
That data showed a 0.5% month-on-month increase in industrial production.
DZ bank added remarks from several ECB policy makers would be "also of interest".
ECB executive board member Isabel Schnabel, seen as the most influential voice in the conservative camp of policymakers, will conduct an online Q&A at 14.00 GMT. Remarks by Schnabel to Reuters in early December contributed to markets bringing forward expectations of rate cuts.
ECB Vice President Luis de Guindos said earlier on Wednesday that the slowdown in euro zone inflation is likely to pause at the beginning of the year.
Italy's 10-year yield dipped 3 bps to 3.82%. Like its German peer it has rebounded a touch in 2024 having tumbled to leave the gap between the German and Italian yields at 162 bps.
Shorter dated bond yields ticked up a fraction, causing curves to become slightly more inverted.