LONDON, Nov 2 (Reuters) - Euro zone government bond yields fell to a multiple-weeks low on Thursday after the Federal Reserve and the Bank of England (BoE) left policy rate unchanged, reinforcing bets central banks are nearing the end of their monetary tightening.

Also supporting bonds this week, Treasury Department said it will slow increases in the size of its longer-dated auctions, relieving some investors who had anticipated a bigger jump in supply.

Germany's 10-year yield dropped to lowest since Sept 15, last down around 5 basis points (bps) to 2.70%, while the two-year yield fell as low as 3.01% to its lowest since Sept 4.

Italy's two-year yield dropped 4 bps to 3.74%, after hitting its lowest in almost two months. The 10-year yield hit a six-week low, last down 10 bps to 4.54%.

The BoE held interest rates at a 15-year peak as it kept up its fight against the highest inflation among the world's big rich economies, and it stressed that it did not expect to cut them any time soon.

On Wednesday, the Federal Reserve left policy rates steady and acknowledged that the recent increase in yields had tightened financial conditions, underscoring market expectations the U.S. central bank is at the end of its monetary tightening campaign.

"The BoE is probably along the path that it expected and probably slightly frustrated that it is not further along," said Geoff Yu, Senior EMEA Market Strategist at BNY Mellon.

"The moves in bond markets yesterday did a lot of work for them already. People are talking about getting back into bonds, including longer dated bonds".

A further sign of the optimistic mood in rate markets was a narrowing of the spread between German and Italian 10-year yields to 184.8 basis points, after hitting 181, its tightest since September 26.

The yield differential had widened to 209 basis points early in October on fears around Italy's increased budget deficit and as a sell off in bond markets around the world took greater effect in the euro zone's more indebted periphery.

In the mix in Europe were comments from European Central Bank (ECB) chief economist Philip Lane that there was still a "good case" for the economy to avoid a recession despite a tightening credit market.

Dutch ECB governing council member Klaas Knot said that the ECB will likely keep interest rates at their current levels in the coming months as it waits for further confirmation that inflation is on a downward trend.

British gilt yields were down in line with European peers, with the two-year yield dropping to its lowest level since June.

U.S. Treasuries also dropped to multiple weeks low with the two-year note slipping to a two-month low, last down 3.4 bps to 4.937% (Reporting by Alun John; editing by Dhara Ranasinghe and Christina Fincher)