By Sophie Kiderlin

LONDON, June 18 (Reuters) - Euro zone bond yields edged higher on Thursday as traders weighed a hawkish shift from the Federal Reserve in a busy week for global central banks, while the U.S. and Iran said they signed a deal that would reopen the Strait of Hormuz.

Yet some tensions appeared to remain, even as the U.S. and Iran released an interim agreement to end the war, with President Donald Trump threatening to resume attacks and kill Iranian officials if they failed to honour their commitments.

Brent crude futures LCOc1 were recently down around 1.8% at $78.12 a barrel, trading around early-March levels.

The yield on the German 10-year bond DE10YT=RR, the benchmark for the euro zone, was a touch higher at 2.9261%, after pulling back for five consecutive days.

German 2-year bond yields DE2YT=RR were up by 2.9 basis points to 2.6128%.

CENTRAL BANKS IN FOCUS

The Federal Reserve held interest rates steady, as expected, on Wednesday. But new quarterly projections showed that nine policymakers now see a hike in rates by the end of 2026. And an updated policy statement removed language that had been used to flag the likelihood of further reductions in borrowing costs this year.

Short-term U.S. Treasury yields rose sharply on Wednesday as expectations for tighter Fed policy grew.

This week's meeting was the first under new Chairman Kevin Warsh, who was appointed by Trump earlier this year with an expectation that he would deliver the rate cuts.

Attention on Thursday was also on central banks elsewhere, with the Swiss National Bank leaving rates unchanged. The Bank of England is due to announce its policy decision later in the day. It is widely expected to keep rates steady.

Their decisions come after the European Central Bank last week raised rates, with the Bank of Japan following suit earlier this week. Markets have been paying close attention to comments from policymakers as they have tried to assess what impact the U.S.-Israeli war on Iran might have on the economy, with worries about rising inflation, higher rates and weaker economic growth taking hold.

Money markets were last pricing in at least one more rate hike from the ECB this year.