Feb 14 (Reuters) - Euro zone government bond yields were

set to end the week slightly higher after U.S. data provided

mixed signals about inflation.

With the Consumer price index (CPI) and producer price (PPI)

data in hand, economists estimated that the core Personal

Consumption Expenditures Price Index (PCE) price index rose 0.3%

in January after gaining 0.2% in December, much lower than the

0.5% gain some had forecast following the CPI data.

Markets monitor prospects for a peace deal in Ukraine, which

could boost the euro area's economy, while taking comfort that

U.S. reciprocal tariffs were not immediately imposed.

Traders priced in 33 of Federal Reserve rate cuts from 32

late Thursday and 26 bps on Wednesday after U.S. data.

Germany's 10-year bond yield, the euro area's

benchmark, was flat at 2.42% and on track to record a 4.5 basis

points (bps) weekly rise.

Money markets priced in a European Central Bank deposit

facility rate at 1.94% in December from

1.85% on Monday.

Germany's 2-year yield, more sensitive to

expectations for ECB policy rates, was unchanged at 2.09%.

Italy's 10-year yield was down one basis point

(bp) at 3.49%. The yield gap between Italian and German yields

was at 106 bps.