LONDON—The euro weakened on Tuesday after European Central Bank President Christine Lagarde tried to rein in interest rate hike expectations that lifted the currency to a three week-high last week. The ECB’s hawkish twist last week took markets by surprise and sent yields on peripheral eurozone debt surging as investors worried about the impact of faster-than-expected monetary tightening on the bonds of the most indebted countries. But on Monday, Lagarde struck a more cautious tone, saying high inflation is unlikely to get entrenched and ECB council member Pablo Hernandez de Cos on Tuesday said any central bank move “has to be gradual.” Eurozone bond yields edged lower on Tuesday but many in the currency market were still concerned that a sharp rise in bond yields could weigh on the prospects of a broad-based economic recovery. Those concerns were particularly acute for peripheral economies such as Italy whose 10-year bond yields …