Euro zone yields head lower after Powell calms the mood

LONDON, April 4 (Reuters) - Euro zone bond yields moved lower on Thursday, helped by cooler than expected inflation data in the currency bloc the day before as well as remarks by the U.S. central bank chief which helped bring a bit of calm to global government bond markets.

** The yield on Germany's 10-year Bund dropped 2 basis points to 2.38%, a second day of small declines.

** Wednesday data showed euro zone inflation came in at 2.4% year-on-year in March, after 2.6% in February. Economists polled by Reuters had expected the rate to stay at 2.6%, although individual country releases in the preceding days pointed to a slightly lower number.

** That data served to reinforce market expectations that the European Central Bank will cut rates at its June meeting.

** U.S. developments also sent bond yields lower around the world on Wednesday. Federal Reserve Chair Jerome Powell said that "if the economy evolves broadly as we expect", he and his Fed colleagues largely agree that a lower policy interest rate will be appropriate "at some point this year".

** U.S. services activity data also showed the measure of prices paid by businesses for inputs dropped to a four-year low, boding well for the inflation outlook, though U.S. private payrolls increased more than expected.

** Italy's 10 year yield dropped 3 basis points to 3.80%

(Reporting by Alun John; editing by Mark Heinrich)