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UPDATE 1-Euro zone bond yields hit 5-week lows as investors front-run ECB

(Updates throughout)

* German, Italian yields at five-week lows

ECB policy outlook outweighs Fed leadership speculation

* ECB meets next week, to outline plans for QE

* US/German yield gap widest in four months

By Dhara Ranasinghe

LONDON, Oct 17 (Reuters) - Borrowing costs across the euro area fell to five-week lows on Tuesday, pushed down by a growing expectation that the European Central Bank will next week signal lower asset purchases for a longer period of time.

Bond yields had opened the day higher as investors weighed up the implications of a potentially more hawkish Federal Reserve chief taking over from Janet Yellen.

But the selling pressure in euro zone bonds proved short-lived as attention returned to next week's ECB meeting, where the central bank is expected to outline its plans for the future of the 2.3-trillion-euro asset purchase scheme.

Reports at the end of last week that ECB policymakers were moving towards announcing more asset purchases at lower volumes have fuelled speculation that the central bank will take loner than anticipated to unwind the programme.

"It's usually the case that markets try to front-run what the ECB will do," said Orlando Green, European fixed income strategist at Credit Agricole.

"We're looking for the ECB to cut monthly asset purchases to 40 from 60 billion euros, but indications are that they will go lower for longer."

Germany's 10-year bond yield fell to 0.36 percent , its lowest in five weeks.

Italian and Spanish bond yields also hit five-week lows, with the former falling almost 3 basis points to 2.01 percent.

Other euro zone bond yields were 1-2 bps lower on the day. The euro slipped to a one-week low.

In contrast, U.S. bond yields jumped on Monday on reports that Donald Trump met Stanford University economist John Taylor to discuss the job of Fed chair as the U.S. President seeks candidates to succeed Yellen next year.

Taylor is known as a proponent of a rule-based monetary policy and according to his formula, known as Taylor rule, the Fed funds rate needs to be much higher than the current target of 1.0 - 1.25 percent.

Yellen said at the weekend that the economy remained strong -- reinforcing expectations of further U.S. rate rises.

U.S. 10-year Treasury yields were a touch higher at 2.31 percent, pushing the gap over German peers to its widest in four months at around 194 bps.

"There is a bit of a headwind from the U.S. because Taylor is known for a rule-based approach that would imply rates being higher than they are now," said Commerzbank rates strategist Rainer Guntermann. "But the soft-as-possible exit scenario from the ECB means that the bullish dynamic in euro zone bond markets may not be over yet."

(Reporting by Dhara Ranasinghe; editing by John Stonestreet)