* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr June 22 (Reuters) - Euro zone bond yields inched up on Tuesday as focus turned to supply with debt sales from Spain and the Netherlands. Spain received 40 billion euros of initial demand for a new 10-year bond it will price later on Tuesday. Analysts expect the bond will raise at least 8 billion euros ($9.52 billion). The Netherlands will raise up to 2 billion euros from the re-opening of a 15-year bond via auction. Yields continued to rise on Tuesday as investors prepared for the supply, with Germany’s 10-year yield up 2 basis points to -0.15% by 0732 GMT. Italian yields rose similarly, keeping the closely watched gap between Italian and German 10-year yields at around 105 bps. Broader focus remained on the U.S. Federal Reserve and U.S. Treasury yields. Policymakers last week projected an accelerated timetable for interest rate hikes as they brought forward their first projected rate increase to 2023 from 2024. That pushed up shorter-dated Treasury yields, which are sensitive to interest rate changes, while longer-dated yields fell as the move indicated the Fed won’t let inflation surge as high as investors previously feared, flattening the U.S. yield curve. Euro area government bonds yields have also risen since the Fed’s pronouncements last week, though short-term German bond yields have risen marginally, unlike the sharp rise in their U.S. peers. “The ECB has not even hinted at tightening policy”, said Rishi Mishra, rates strategist at Futures First. “The long end is tracking U.S. rates, while the short end is anchored by the ECB,” he added. European Central Bank president Christine Lagarde said on Monday it was not yet time to allow interest rates to rise and that the ECB would maintain favourable financing conditions, likely supported bond prices on Tuesday. Focus remains on the ECB on Tuesday with chief economist Philip Lane due to speak at 1400 GMT, followed by board member Isabel Schnabel at 1730 GMT. Focus is also on Fed chairman Jerome Powell’s testimony at a congressional hearing at 1800 GMT. “With little other data to trade off the policy implications for U.S. rates should remain in the driving seat for now,” ING analysts told clients. ($1 = 0.8403 euros) (Reporting by Yoruk Bahceli Editing by Raissa Kasolowsky) Our Standards: The Thomson Reuters Trust Principles.