* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr (Rewrites throughout with yields rising) LONDON/AMSTERDAM, Feb 24 (Reuters) - Euro zone bond yields tracked those of U.S. treasuries higher on Wednesday after Federal Reserve Chair Jerome Powell’s dovish testimony did little to dampen inflation worries. Powell reiterated the Fed’s commitment to low interest rates, leaving some investors worried that inflation could spike with further fiscal stimulus measures. Yields for European government bonds had been steady for most of the session until the U.S. 10-year note yield jumped to it’s highest since February 2020 at 1.435% and triggered a quick adjustment throughout the bloc. “The correlation between the two markets is quite high”, said Antoine Bouvet, senior rates strategist at ING. Prospects for more U.S. fiscal stimulus have driven reflation bets across markets, pulling up global bond yields, led by U.S. Treasuries. That trade has also hurt euro zone bonds, even though the rise in yields there is seen as less justified given the weaker economic outlook in the bloc. European Central Bank chief Christine Lagarde said on Monday the bank is closely monitoring rising borrowing costs. German 10-year yields, the region’s benchmark, are set for their biggest monthly jump since January 2018. They rose to as much as -0.274% in afternoon trading, the highest since June 2020, but eased back to -0.295% towards the end of the session. Ten-year French government bond yields also rose to a 9-month high and flirted with positive territory, reaching -0.01% at one stage. Italy, which has a lower credit rating, saw its 10-year yields jump to 0.72% then retreat to 0.70%. In the primary market, Germany raised 3.32 billion euros from the re-opening of a 10-year bond via auction, which drew demand of 1.5 times the amount raised, compared with twice the demand last time it auctioned the maturity, before the sharp rise in bond yields. Strong exports and solid construction activity helped the German economy grow by a stronger-than-expected 0.3% in the final quarter of last year, the Federal Statistics Office said on Wednesday, revising up an earlier estimate of 0.1%. The office also revised upward its 2020 full-year GDP figure for Europe’s largest economy to -4.9% from -5.0%. (Reporting by Julien Ponthus and Yoruk Bahceli; editing by Andrew Cawthorne, Larry King, Kirsten Donovan)