* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr May 31 (Reuters) - Euro zone bond yields rose ahead of Germany’s inflation reading on Monday, though kept below recent highs, ahead of broader euro zone data on Tuesday. It was an otherwise quiet trading session with traders in the United Kingdom and United States on public holiday. Though yields started the week higher, they stayed far below recent highs, as expectations of a dovish tone from the European Central Bank at its June 10 meeting continued to drive the market. Bond yields rose sharply earlier in May driven by a brighter economic outlook, prompting speculation that the ECB may slow its bond buying. But comments from ECB President Christine Lagarde and other policymakers that it is too early to remove the support have brought down bond yields. Inflation has been bond investors’ key focus this year, driven higher by pent-up demand supply constraints as economies re-open, and whether it will be transitory as central bankers argue. On Monday, following regional readings, Germany’s national data due at 1200 GMT is expected to show inflation rose 2.3% year-on-year in May, compared to 2% in April, according to a Reuters poll, holding above the European Central Bank’s target of close to but below 2%. Germany’s 10-year yield, the benchmark for the bloc, was up nearly 2 basis points to -0.17% by 0720 GMT, far below its recent two-year highs at -0.074%. “Above-consensus CPI readings from Germany today could pose risks to Bunds though as this would be a harbinger for a higher euro area flash (inflation) tomorrow,” Commerzbank strategist Rainer Guntermann told clients. But he added that with core euro area inflation, which strips out volatile food and energy costs, likely to remain below 1%, that is unlikely to change ECB sentiment. Italy’s 10-year yield meanwhile rose nearly 1 basis point to 0.93%, keeping the closely watched gap between Italian and German 10-year yields at 109 bps, the lowest in over two weeks. In the primary market, Belgium will raise up to 3.4 billion euros from the re-opening of bonds due 2025, 2031 and 2050. Focus this week is on the European Union, which is expected soon to reveal details about the funding plan for its coronavirus recovery fund after all member states backed the ratification of a law that will allow the EU to start borrowing on the market. (Reporting by Yoruk Bahceli, Editing by William Maclean) Our Standards: The Thomson Reuters Trust Principles.