Sept 13 (Reuters) - Euro zone government bond yields

fell on Friday, mirroring a decline in U.S. Treasury yields

after media reports fuelled speculation about a big interest

rate cut by the Federal Reserve next week.

The Wall Street Journal and the Financial Times reported it

might be a close call next Wednesday on whether the U.S. central

bank cuts by a large 50 basis points (bps) or 25 bps, surprising

markets that hitherto have seen a quarter-point move as more

likely.

The rate-sensitive U.S. 2-year Treasury yield

slipped 6.8 bps to 3.58% on Friday, as traders bought bonds in

anticipation of an aggressive cut by the Fed. Bond prices move

inversely to yields.

"A WSJ article seemed to open the door again for 50 bps,

making 25 bps not quite a done deal yet," Citi strategist Dirk

Willer said. "Perhaps a 50bp cut is still on the table because

when comparing the economic data relative to past easing cycles,

we are already in a weaker spot."

Citi strategists however expect the U.S. central bank to cut

rates by 25 bps next week, and sees cuts of 50 bps each in

November and December.

Traders are pricing in a 43% chance of a large 50 bps cut by

the Fed next week, as per CMEGroup's Fedwatch tool, up from 28%

a day ago.

A slew of central banks including the Fed, the Bank of Japan and

the Bank of England are set to announce rate decisions next

week, renewing the broad picture of global monetary policy.

The European Central Bank cut rates as expected on Thursday and

tweaked its economic forecasts, but gave little away in terms of

the time or size of subsequent moves. Another cut by December

fully priced into markets but the chance of an interim move in

October is seen only at 30%.

The German 10-year bond yield, the benchmark for

the euro zone bloc, slipped 1.9 bps to 2.14% and looked on track

to end the week slightly lower.

The two-year bond yield, which is more sensitive

to ECB rate expectations, fell 4 bps to 2.19%.

"We see scope for a further correction in Bunds in the

coming weeks if data support a scenario of gradual ECB easing,"

Unicredit analysts noted.

Ratings agencies Moody's and S&P Global are expected to

review their sovereign credit rating for Spain later on Friday.

The spread between German and Spanish bond yields

widened marginally to 80.3 bps from 77.8 bps in

the prior session.

Italy's 10-year yield fell 2.6 bps​ to 3.53%,

and the gap between Italian and German bond yields

stood at 138 bps, mostly unchanged on the day.