(Updates with details)

By Yadarisa Shabong

March 26 (Reuters) - Euro zone government bond yields

were little changed on Wednesday as markets were kept in check

by caution about looming U.S. tariffs next week and their

potential impact on economic growth.

The spotlight, however, was on Britain ahead of what is

expected to be tough budget update later in the day.

British finance minister Rachel Reeves is likely to

announce cuts to spending plans in an attempt to show investors

she can be trusted to fix the public finances as growth falters.

The German 10-year bond yield, the benchmark

for the euro zone bloc, was about flat at 2.791%. It hit a

one-week high of 2.831% on Tuesday as hopes for U.S. tariff

concessions drove investors to riskier assets.

It has gained more than 40 basis points so far this

month, chiefly due to Germany's plan to massively boost spending

to revive growth in Europe's largest economy.

"Considering that we should see a bit more stronger

growth going forward in Europe, I think the risk-reward is

probably skewed towards higher yields into the second quarter,"

said Kenneth Broux, head of corporate research FX and rates at

Societe Generale.

"But the tariff story is in the background and ... we

can't ignore that at all," Broux added.

The European Union's trade commissioner Maros Sefcovic met

with U.S. President Donald Trump's top trade officials on

Tuesday to try to avoid steep U.S. tariffs on EU goods next

week.

Some countries are preparing trade concessions ahead of

Trump's April 2 announcement of reciprocal tariffs. Trump said

this week some countries would get breaks, without giving

further details.

"There's so many other factors that need to come ...on

the 2nd of April, we have the tariff announcement by the U.S.,

is there going to be further escalation from the European Union,

what does that mean for inflation growth," Broux said.

The ECB has not committed to any decision on rates in

its next meeting in April. Data, including that for Spain and

France inflation on Friday, will be important.

The Germany 2-year bond yield, more sensitive

to ECB policy rates, was little changed at 2.132%.

Markets are pricing in a ECB deposit rate at roughly

1.98% at the end of 2025.

Italy's 10-year yield was about flat at

3.898%, and the gap between Italian and German 10-year bond

yields was 110 bps.

Britain's 10-year government bond yield was

down 2 bps at 4.372% after weaker-than-expected

UK inflation data

.