(Updates yields at 1504 GMT)

By Stefano Rebaudo

July 19 (Reuters) - German Bund yields rose on Friday

but headed for a second weekly decline, as economic data and the

European Central Bank's policy meeting supported expectations

for a rate cut in September.

The ECB left rates unchanged on Thursday and did not provide

any guidance for the future, with President Christine Lagarde

saying that a move in September was "wide open."

Some ECB's hawkish policymakers are open to a cut in

September, provided incoming data confirm that disinflation is

continuing, four sources told Reuters on Thursday.

Commerzbank analysts mentioned a media report arguing that

policymakers were increasingly wondering if they may only be

able to cut once more this year and did not want investors to

assume that September is a done deal.

Lagarde's communication "carefully struck a balance between

hawkish and dovish pieces of information that have come to light

recently, with the evident intention of not arbitrating between

the two and of avoiding steering expectations either way", Citi

analysts said.

"But if forward-looking indicators and survey data are

reliable, there is every reason to believe that the Governing

Council will find cause to ease policy in September."

Data showed early this week that German investor morale

deteriorated more than expected in July, registering its first

fall in a year and suggesting the recovery in the euro zone's

largest economy will be bumpy.

Germany's 10-year government bond yield, the

euro area's benchmark, was up 6 basis points (bps) at 2.465% and

on track for a weekly fall of 3.1 bps.

"Our median baseline of no September rate cut still holds,

which is built on a combination of the strength of the labour

market, sticky underlying inflation, and the recovery of the

euro area growth," said Piet Haines Christiansen, director ECB

and fixed income research at Danske Bank.

"We repeat that a key risk to our ECB September rate call is

whether the Federal Reserve will cut in September and whether

this adds 'political' pressure to cut rates as well, despite the

sticky underlying inflation," he said.

Italy's 10-year government bond yield, the

benchmark for the euro area periphery, rose 6 bps to 3.76%.

French 10-year yields were up 5.8 bps at 3.12%,

in line with the broader market.

However, investors have closely watched developments in

France, as the lack of clear leadership could make the deficit

reduction process more challenging, making credit rating

agencies question France's AA rating.

Markets looked at U.S. President Joe Biden's fate in the

presidential race while chances of a win for Donald Trump have

kept rising. Analysts expect Trump to boost public spending and

cut taxes if he wins the Nov. 5 vote.

"The agenda he (Trump) pursues could continue to

perpetuate economic growth for the time being, even if there

will be a day when the commander-in-chief goes to battle against

a disgruntled bond market, only to learn that there are limits

on his power," said Mark Dowding, BlueBay chief investment

officer, RBC BlueBay Asset Management.

The difference between 10-year Treasury yields and Bunds

has widened by 3.8 bps this week - the most in a

week since April, to 175.91 bps, as investors have sold U.S.

debt fairly heavily, given the concern over the country's

finances should Trump win the election in November.