* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr MILAN, Oct 6 (Reuters) - Euro zone yields rose as a government bond sell-off extended on Wednesday on concerns about inflation and potential monetary policy tightening, while German 10-year breakeven inflation rates hit their highest since May 2013. Oil prices jumped, with U.S. crude hitting its highest since 2014, after the OPEC+ group of producers stuck to its planned output increase rather than raising production further. The yield on the U.S. Treasury bill maturing on Oct. 21 touched a record high at 0.19% as a stalemate between Republicans and Democrats about the debt limit showed no sign of abating. “While the latest increase in inflation expectations is fuelled by high-flying oil and gas prices, broader factors appear at play with global reflation fears supporting a reversal of the inflation risk premium,” Commerzbank analysts said. Germany’s 10-year government bond yield, the benchmark of the bloc, was up 2.5 basis points, after hitting its highest since end-June at -0.147%. Italy’s 10-year government bond yields were up 5 basis points at 0.909%. European Central Bank President Christine Lagarde said on Tuesday she still expected supply shortages or rising energy prices to be transitory, repeating the bank’s long-standing line that the inflation spike will wane next year. Germany’s 10-year breakeven inflation rate rose to 1.74%, the highest since 2013. “Currently high price pressures are a transitory phenomenon is a mantra that has been reiterated over and over by the ECB. But it seems that even here subtle shifts of tone are taking place,” ING analysts said, flagging that some council members voiced concerns over more lasting effects. They mentioned recent comments by policymaker Robert Holzmann -- “a well-known hawk” -- but also by France’s Francois Villeroy de Galhau whose “description of the ECB’s stance as ‘vigilant, but not worried’ has morphed to a ‘vigilant, but not feverish’.” Villeroy also said on Tuesday there was still a risk the ECB would miss its 2% inflation target. “A stabilisation seems possible today as risk assets are increasingly affected by inflation fears. We still suggest using Bund recoveries to reduce risk,” Commerzbank analysts added. European stocks tumbled more than 1% on Wednesday as the surge in oil prices intensified concerns over higher inflation while investors moved out of high-growth tech stocks into banking shares. (Reporting by Stefano Rebaudo; Editing by Toby Chopra) Our Standards: The Thomson Reuters Trust Principles.