LONDON - Euro zone government bond yields inched higher on Monday after rising sharply at the end of last week following stronger-than-forecast U.S. labour market data, suggesting that the Federal Reserve could slow its pace of easing.

Germany's 10-year yield, the euro area benchmark, was up 1 bp at 2.227%.

The U.S. added 254,000 non farm payrolls in September, well above expectations in a Reuters survey of economists. The unemployment rate dropped to 4.1%.

"The payroll report should put to rest any expectations of a 50bp cut in November," said Mohit Kumar, an economist at Jefferies.

Futures markets almost fully wiped out the chances of another 50 bp rate cut from the Fed at the meeting next month - which stood at around a one-in-three chance before the data - with markets seeing a 25 bp rate cut as the most likely outcome.

The size and importance of the U.S. economy means U.S. economic data tends to impact bond markets and central banks globally.

Germany's two-year yield, which is sensitive to changes in monetary policy expectations, was up 1 bp at 2.217%. It jumped over 13 bps on Friday, its biggest one-day rise since April, 2023.

Italy's 10-year yield was up 1 bp at 3.529%, with the gap between Italian and German 10-year yields steady at 129 bps.

(Reporting by Samuel Indyk, editing by Ed Osmond)