* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr LONDON, March 15 (Reuters) - Europe’s government bond yields opened 2 to 3 basis points lower on Monday, with the spread between U.S. and German 10-year yields at its widest in a year, as markets looked ahead to the U.S. Federal Reserve meeting on Wednesday. Rising bond yields have spooked markets so far in 2021, with market participants worried that an economic recovery from COVID-19, combined with fiscal stimulus, could cause a spike in inflation from pent-up consumer demand when lockdowns end. U.S. Treasury yields were close to a 13-month peak on Monday, pushed higher by bets that economic growth in the United States will accelerate after President Joe Biden’s $1.9 trillion stimulus bill got its final approval last week. But Germany’s benchmark 10-year Bund yield was at -0.322%, down 3 bps on the day at 0821 GMT. The yield peaked at a one-year high of -0.203% on Feb. 26 and has since stabilised below this level. The Italian 10-year yield was also lower, down 2 bps on the day at 0.618%. At its meeting last week, the European Central Bank said it would increase the pace of its bond-buying to limit the rise in yields. “Most of what the ECB could have achieved by announcing faster PEPP purchases we think it undid with displays of disunity,” wrote ING strategists in a note to clients. “We expect the impact to be transitory, but sufficient to drive further widening of the USD-EUR rates differential.” The gap between U.S. and German 10-year yields was at its widest since February 2020. In a busy week for central bank meetings, markets will hear from the Federal Reserve on Wednesday, the Bank of England and Norges Bank on Thursday, and the Bank of Japan on Friday. “The Fed’s challenge is to manage the transition from a low to a high interest rates regime without causing market mayhem,” ING said. “The money, we think, is in guessing how the curve will get from here to there (i.e. above 2% yield for 10Y Treasuries). Our best guess is via a cheapening of 5Y, and long-end flattening.” Elsewhere, Italy announced new, tighter COVID-19 restrictions on Friday, after infections rose. France is also grappling with rising cases. “Relative to our previous assumptions, we now expect no significant easing in the euro area until early May, but see a faster unwind of restrictions in the UK as it leads Europe’s reopening by around a 1½ months,” Goldman Sachs strategists said in a note. (Reporting by Elizabeth Howcroft, editing by Larry King)