June 21 Reuters German government bond yields fell on Friday after economic survey data for the euro zone came in weaker than expected, supporting expectations for policy rate cuts.

Euro zone yields bounced around in the afternoon session in Europe, as traders digested U.S. data showing a pickup in business activity and remained nervous about political uncertainty in France.

Euro area business growth decelerated sharply this month as demand fell for the first time since February, surveybased data showed on Friday.

Weak demand dragged down France39;s business activity as the country heads into a snap parliamentary election, while an upturn in Germany slowed in June.

German 10year bond yields , the benchmark for the euro area, fell 3 basis points to 2.399.

French 10year yields , fell in morning trading before reversing course later in the day to trade roughly flat at 3.156.

The gap between French and German 10year yields a gauge of risk premium investors demand to hold French government bonds widened 3 bps to 75 bps, having gapped to around 80 bps last Friday, its widest level since February 2017.

Surveys suggest a solid recovery in the euro zone economy is not a done deal, said Franziska Palmas, senior European economist at Capital Economics.

Meanwhile, aggregate price pressures continued to ease but remained strong in the services sector, which will keep ECB policymakers cautious, she added.

Money markets price in around 70 bps of cumulative European Central…