* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr (Recasts top, updates prices) MILAN, Sept 15 (Reuters) - Euro zone bond yields rose on Wednesday, tracking moves in U.S. Treasuries as investors digested weaker-than-expected American inflation data released the day before. The CPI numbers suggested the Federal Reserve might be more dovish at next week’s policy meeting, as it prepares to reduce its bond-buying programme and determine how soon to lift interest rates from near zero. U.S. borrowing costs rose, with the 10-year Treasury yield up 2 basis points at 1.30%, after falling more than 6 bps on Tuesday as data showed consumer prices increased at their slowest pace in six months. “At present, this slight deceleration in consumer prices, combined with the subdued improvement in the U.S. labour market and participation rate, supports the Fed’s prevailing patient stance,” Raymond James European Strategists said. Germany’s 10-year government bond yield rose 2.5 basis points to -0.315% “The outperformance of U.S. Treasuries, which has taken 30y spreads over Bunds to the lowest level this year, underscores the U.S. impulses are more relevant for the market direction ahead of next week’s FOMC meeting,” Commerzbank analysts said. Euro zone inflation has been rising more than expected recently but the European Central Bank has stuck to its belief the spike is temporary. ECB policymaker Pablo Hernandez de Cos reiterated this view on Wednesday and said the central bank had tools to address any persistent upward pressure on prices. Meanwhile the ECB’s Isabel Schnabel said investors may be overestimating the impact of the Delta variant on the economy. “We see euro zone yields range-bound before the ECB’s December policy meeting with the central bank dovish stance offsetting rising inflation expectations,” said Lauréline Renaud-Chatelain, fixed income strategist at Pictet Wealth Management. “We believe that just a big surprise in inflation data can change this scenario.” “Besides, we don’t expect much price action on government bonds ahead of the German elections,” she added. Germany’s federal election on Sept. 26 is too close to call, with the number of voters who are still undecided at a record high. Some analysts forecast a more expansionary fiscal policy in Germany and Europe if, as expected, the Greens form part of the new government. Italian bonds underperformed after outperforming on Tuesday as a country’s auction closed with the 10-year yield down 3.5 bps to 0.65%. Italy’s 10-year government bond rose 4 basis points to 0.689%, with the spread with the German Bund widening above 100 bps after tightening below that level on Tuesday for the first time in a month. Austria hired a syndicate of banks to sell a new 15-year bond, according to a lead manager memo seen by Reuters. It is expected in the near future “subject to market conditions”, a phrase debt management offices usually use a day before a sale. The European Union raised 5 billion euros on Wednesday from its first-ever auction of bills, another crucial step toward its evolution into a leading issuer.