By Dhara Ranasinghe
LONDON, April 25 (Reuters) - German Bund yields held above 0.2 percent on Monday, hovering near recent one-month highs amid some nervousness ahead of this week's central bank meetings in the U.S. and Japan.
Bund yields ended Friday with their biggest weekly rise since last December after a rebound in oil prices and a wait-and-see message from the European Central Bank at a policy meeting on Thursday.
Focus now turned to the U.S. Federal Reserve, which meets on Wednesday, and a Bank of Japan meeting on Thursday.
The Fed is expected to hold rates steady, but may tweak its description of the U.S. economic outlook to reflect more benign conditions, leaving the path open for future rate rises.
The Bank of Japan is likely to cut its price forecasts and debate whether a strong yen, weak global demand and soft consumption have hurt inflation expectations enough to warrant another blow of stimulus.
Bloomberg reported on Friday that the BOJ is considering further easing monetary policy by applying negative rates to its lending for financial institutions.
"It seems like there are some expectations for BOJ easing come Thursday," said Rabobank fixed income strategist Lyn Graham-Taylor. "It is interesting because the last time the BOJ eased it was seen as a worrying sign for global markets."
The yield on 10-year German bonds, the benchmark in the euro zone, was steady at 0.23 percent and within sight of one-month highs hit last week at 0.24 percent.
Bund yields have moved further away from a low of 0.075 percent hit earlier this month just as the April 29th anniversary of last year's sharp sell-off draws near.
After failing to break below zero, Bund yields jumped above 1 percent last year in a matter of weeks, causing serious damage to investors, who at the time were almost unanimously positioned for a further fall in German borrowing costs.
Elsewhere, Austrian government bonds showed little immediate reaction to Sunday's presidential election.
Austria's far right won more than a third of the vote in the election and will face an independent in next month's run-off, dumping out the country's two main parties from the post for the first time.
While the presidency is largely a ceremonial role, the fact that neither of the main ruling parties will be battling for the post on May 22 marks a major change in Austrian politics - as well as the rising role of the far right in Europe.
"The results are unlikely to trigger a significant reaction in euro zone government bond markets this morning but illustrate the political risks facing Europe," said Antoine Bouvet, rates strategist at Mizuho, said in a note.
(Reporting by Dhara Ranasinghe; Editing by Toby Chopra)