By Sophie Kiderlin

LONDON, June 2 (Reuters) - Euro zone government bond yields fell on Tuesday, partially reversing Monday's jump, as hopes of a U.S.-Iran deal resurfaced despite lingering uncertainty.

Optimism had faded heading into the week, but comments from U.S. President Donald Trump late on Monday revived hopes after he said talks on ending the conflict with Iran were continuing.

On Tuesday, a source close to Iran's negotiating team told Mehr News that Tehran has yet to respond to a proposed final agreement with the U.S., and that internal discussions on the text are ongoing.

Oil prices slipped, with Brent crude futures LCOc1 last around 0.9% lower to $94.13 a barrel.

The yield on the German 10-year government bond, the euro zone benchmark, fell 5.7 basis points to 2.9563%, after rising 8 bps on Monday.

Italy's 10-year yield dropped 8.1 bps to 3.6794%, also paring the previous session's sharp rise.

Markets were also awaiting May's flash euro zone inflation data, due later on Tuesday, for fresh clues on the economic impact of the Iran war. Economists polled by Reuters expect inflation of 3.2%, after it jumped to 3% in April on higher oil prices, well above the ECB's 2% target.

The data comes ahead of the European Central Bank's June 11 meeting. Money markets are pricing in about a 95% chance of a 25-bp rate hike then, with a total of two such hikes seen this year and a chance of a third.

Germany's two-year yield, sensitive to rate expectations, was last down 5 bps at 2.5791%, after jumping more than 9 bps on Monday.

Italy's two-year yield fell 7.5 bps to 2.7455%, also reversing part of Monday's rise.