* Euro zone yields near multi-month highs * Long-dated euro zone debt under-performs in selloff * France’s 50-year now trading at cash price of 87 * Italy to sell 10-year and 30-year inflation-linked bonds * Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr LONDON, Feb 16 (Reuters) - Ultra-long-dated bonds issued recently by euro zone countries have been hit particularly hard this week as prospects of economic recovery and rising inflation have pushed yields higher across the single-currency bloc. With Italy expected to sell 10-year and 30-year inflation-linked bonds on Tuesday, there are some concerns that the window for long-dated issuance may be closing after Monday’s sell-off in euro zone government debt. Euro zone government bond yields were flat to lower on Tuesday but still near multi-month highs, after a fall in COVID-19 cases in the United States and the UK and expectations of extraordinary fiscal stimulus hit bond markets. While the selloff affected euro zone government bonds across the board, long-dated debt was particularly hard hit. “We have seen some steepening of the curve this week on this economic optimism, making the 50-year part of the curve less attractive,” said ING rates strategist Antoine Bouvet. “The relative value is not completely gone - but there may be less favourable conditions for issuance if volatility picks up.” France, Belgium and Spain all sold 50-year bonds in recent weeks, and they are all trading well below their issue prices. France’s 2071 notes were trading at a cash price of 87 and a yield of 0.81%, compared with a yield of 0.593% on issue in mid-January. Belgium’s and Spain’s 50-year bonds were trading at a cash price of 91.87 and 97.9 respectively. That suggests future long-dated issuance may be more of a struggle for euro zone countries in the future. However, Bouvet expects Italy’s bond sale to draw strong demand amid inflation expectations and former European Central Bank chief Mario Draghi’s taking office as Prime Minister. “As much as I have misgivings about whether rise in inflation expectations are justified in the long term, it should boost appetite for inflation hedges and therefore for today’s Italy 30-year issue,” Bouvet said. Long-term inflation expectations in the euro zone were at 1.3492% in Tuesday, close to a recent 19-month high of 1.3804%, according to a key market gauge. “We consider the Italian treasury’s decision to syndicate the new 10-year a sign that they are looking to get out as much supply as possible while favourable conditions persist, cashing in on the fundamentally improved Italian political outlook,” Mizuho analysts said. Generally, euro zone government bond yields dipped after Monday’s move but were still close to some of their highest levels in several months. Germany’s 10-year government bond yield was lower at -0.393%, close to a five-month high of -0.376% on Monday. (Reporting by Abhinav Ramnarayan, editing by Larry King)