* Italy/Germany 10-year yield spread at tightest in two weeks * Italy to sell 5.5-6.5 bln euros of bonds in auction * German yields up ahead of U.S. Core PCE data * Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr LONDON, May 28 (Reuters) - The gap between Italian and German bond yields was at its narrowest in more than a fortnight on Friday ahead of an Italian bond auction, as the promise of European Central Bank largesse helped push Italy’s borrowing costs down for a second week in a row. Italy is due to sell between 5.5 billion and 6.5 billion euros of five-year and 10-year bonds in an auction later on Friday, and the dovish reinforcement of the ECB in recent months should help support demand, market observers said. With euro zone countries having racked up debt to combat the economic impact of the COVID-19 pandemic, this support could prove crucial, especially for countries such as Italy that came into the crisis already with a heavy debt load. “Today’s supply should be well received, and the trend tightening should continue as ECB dovishness feeds more into market pricing ahead of their next meeting,” analysts at Mizuho said in a note. While Italian 10-year yields were slightly higher on the day at 0.95%, they are still down eight basis points this week so far. The closely-watched Italy-Germany 10-year bond yield spreads hit their tightest levels in over two weeks at 110 basis points. The ECB remains committed to shielding the euro zone economy as the path of the coronavirus pandemic remains uncertain, and authorities should not withdraw support too soon, ECB President Christine Lagarde said on May 18. This helped reverse a sharp sell-off in Italian bonds. Ten-year yields had risen 64 basis points to 1.16% in the lead-up to those remarks, but soon after fell back below the 1% mark. Beyond Italy, euro zone yields were broadly 1-2 basis points higher on Friday, slightly reversing the falls of the week so far, ahead of the release of the Core PCE Price Index in the United States due at 1230 GMT. This is the U.S. Federal Reserve’s “favourite inflation metric”, according to Charalambos Pissouros, senior market analyst at JFD Group, and should provide further clues on rising inflation in the world’s largest economy. German 10-year yields were 1.5 basis points higher at -0.157%, but still comfortably off their recent one-year high of -0.074%. Reporting by Abhinav Ramnarayan Editing by Gareth Jones Our Standards: The Thomson Reuters Trust Principles.