* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr LONDON, July 27 (Reuters) - Government bond yields across the euro area edged down on Tuesday, with German Bund yields holding close to 5-1/2 month lows hit the previous session as a two-day meeting of the U.S. Federal Reserve loomed. Ten-year bonds yields across the bloc have tumbled some 20 basis points this month as investors question global reflation trades and concerns about coronavirus Delta variants rises to the top of their worry list. A soft tone in equity markets after a third straight session of heavy selling in Chinese internet giants supported safe-haven debt, but market moves were generally muted ahead of the Fed’s policy meeting. Germany’s benchmark 10-year Bund yield was down 2.5 bps at -0.45% , near a 5-1/2 month low touched briefly on Monday . Most other 10-year yields in the euro area were around 2-3 bps lower . “We doubt there will be much appetite from market participants to add new positions ahead of tomorrow’s FOMC event risk but we cannot exclude profit taking on tactical longs opened in the July rally,” said ING senior rates strategist Antoine Bouvet. “This should at least prevent a further drop in rates today, but not after the meeting if we receive no strong signal on tapering.” There was some focus on real or inflation-adjusted bond yields, which continue to head lower. The yield on 10-year Treasury Inflation-Protected Securities (TIPS) fell to a record low for a second straight day, touching -1.147% in early London trade. German inflation-linked bond yields also extended their recent falls, hitting a new low at around -1.747%. According to Tradeweb data, yields on the current 10-year inflation-protected securities for the UK and Germany are at their lowest closing points since they started trading. ING’s Bouvet said the fall in real yields could be explained by thin market liquidity and hefty central bank bond buying. “Of course there are macro worries, and the phase of growth acceleration of this cycle looks to be over, but this does not justify rates where they are,” he said. Analysts at UniCredit said another factor driving real yields down could be the relatively dovish tone from Fed chief Jerome Powell and the European Central Bank. Reporting by Dhara Ranasinghe Editing by Tomasz Janowski Our Standards: The Thomson Reuters Trust Principles.