* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr AMSTERDAM, March 31 (Reuters) - Euro zone bond yields calmed on Wednesday after a sell-off a day earlier as investors awaited inflation data for the region. German and Italian yields rose on Tuesday to their highest in nearly two weeks, driven by a sell-off in U.S. Treasuries as U.S. vaccinations picked up and expectations grew that trillions of dollars of infrastructure spending could further lift economic growth and debt issuance. On Wednesday, Germany’s 10-year yield, the benchmark for the euro zone, was unchanged at -0.28% by 0722 GMT. Other government bond yields were also flat. Focus is on the first-estimate March euro zone inflation reading, which a Reuters poll expects jumped to 1.3% year-on-year in March, up from 0.9% in February. The core inflation reading, which excludes food and energy costs, is expected to remain unchanged from February at 1.2%, according to the poll. Following national readings on Tuesday, which showed German inflation exceeding the European Central Bank’s target of close to but below 2%, bloc-wide data should not come as a surprise to the market. “The ECB has already made clear it will look through the spike in inflation, a result of supply-side shocks and one-off factors. It has underscored that point by stepping up its PEPP purchases for three months at the most recent policy setting meeting,” ING analysts told clients. On the last day of March trading, German 10-year yields were set to end the month 2 basis points lower, outperforming U.S. Treasuries, which have risen 28 bps this month. Bond yields move inversely with prices. Germany’s 10-year yield is still set for its biggest quarterly rise since the fourth quarter of 2019, up 30 bps since the start of the year after a sell-off in February. That was driven by rising Treasury yields and expectations the U.S. stimulus package would bring back inflation and growth. Focus is on President Joe Biden, who will outline the first part of some $3 trillion to $4 trillion of infrastructure spending proposals expected over the next 10 years. Private employment data out due out of the United States may also pose an upside risk, Commerzbank analysts said. “EUR rates can shrug off today’s inflation print, but not another leg higher in USD rates,” ING said.