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Oct 19 (Reuters) - Euro zone bond yields were steady on Tuesday, stabilising after a sharp sell-off in the bond markets of developed economies in the previous session.
Euro area bond yields moved sharply higher on Monday, tracking their British counterparts. Short-dated British yields spiked that day on growing bets that the Bank of England is planning back-to-back interest rate rises in November and December after BoE Governor Andrew Bailey signalled the central bank would act to curb inflation expectations.
But markets calmed on Tuesday and short-dated bond yields moved only marginally in the U.S. Treasury and UK gilt markets.
Germany's 10-year yield, the benchmark for the bloc, was up 1 basis point at -0.14% by 1132 GMT.
The yield curve steepened somewhat one day after the gap between German 10 and 30-year yields fell to the lowest since January.
The yield spread between 10-year Italian and German bonds was at 105 bps, after rising to 107 bps on Monday - the highest in nearly two weeks.
Annalisa Piazza, fixed income research analyst at MFS Investment Management, said it is "extremely" hard to tell if Tuesday's market stabilisation will last.
"We need to understand what is driven by real, underlying factors, what is driven by speculation and what is driven by end of the year profit-taking," she said.
Market focus on Tuesday is on European Central Bank speakers, particularly ECB chief economist Philip Lane at 1400 GMT.
Caught up in Monday's sell-off, money markets moved to price in a full 10 basis point rate hike by the ECB by September 2022, having previously priced in a full hike in December 2022.
Analysts also said growing rate hike bets would have been expected to cause sharper moves on the yield spreads between Southern European and German bonds and a meaningful rise in euro zone inflation-linked bond yields.
ECB policymaker and French central bank chief Francois Villeroy de Galhau said there is no reason why the bank should increase rates between now and the end of next year.
But ECB policymaker Olli Rehn, also Finland's central bank governor, said that if elevated inflation lasts much longer, it could have a more significant impact on inflation expectations.
Investors will also watch several speakers from the Bank of England and the U.S. Federal Reserve later in the session, as moves in euro area bonds have been largely driven by their respective bond markets.
In the primary market, Finland raised 941 million euros from the re-opening of a 10-year bond at auction.
Reporting by Yoruk Bahceli; Editing by Timothy Heritage and Ana Nicolaci da Costa