Euro zone government bond yields rose on Thursday after falling the day before, with investors expecting the European Central Bank to cut rates by 25 basis points later in the session while focusing on possible clues about the rate path.

Markets will want to see if the ECB maintains a reference to rates being restrictive, as such a phrase would signal that more policy easing remains the baseline. They will also be looking for any updates on the impact of trade barriers.

Germany's 10-year yield, the euro area's benchmark, rose 5.5 basis points (bps) to 2.51% after falling 4 bps the day before.

"The potential upward shock to growth of (German chancellor-in-waiting Friedrich) Merz's plan and the supply constraints of tariffs suggest the ECB should maintain rates in tight to neutral territories," said Kevin Thozet, a member of the investment committee at Carmignac.

Germany's new coalition government recently unveiled economic and tax reforms aimed at bringing Europe's largest economy back to growth.

"However, the reality is the pain induced by lower household and corporate confidence induced by (U.S. President Donald) Trump, and (White House trade adviser Peter) Navarro policies will be felt first," he added, arguing that such a backdrop calls for further steepening of the European yield curve.

Trump said there was "big progress" in preliminary talks with a Japanese trade delegation in Washington about the barrage of tariffs he has imposed.

Analysts expect the yield curve to steepen further, with long-term yields climbing while short-term rates stay linked to what markets anticipate from the ECB.

Germany's 2-year yield, more sensitive to expectations for ECB policy rates, rose 5.5 bps to 1.80%.

U.S. Treasury yields rose in London trade, with the benchmark 10-year yield up 3.5 bps after falling 4.5 bps the day before as Federal Reserve Chair Jerome Powell's comments stoked concerns about economic growth and inflation.

Italian bond yields were up 2.5 bps at 3.72%, with the gap between Italian and German yields -- a market gauge of the risk premium investors demand to hold Italian debt -- at 118 bps. Last week, credit rating agency S&P upgraded Italy's long-term ratings to "BBB+" from "BBB".

Market pricing for the ECB rate path remained roughly unchanged this week as concerns about the adverse economic impact of U.S. tariffs stalled.

Investors are pricing the ECB deposit rate at 1.68% by December, implying three rate cuts from the current 2.5% and about a 30% chance of a fourth easing move.

(Reporting by Stefano Rebaudo, editing by Ed Osmond)