* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr (Recasts, adds details, updates prices) MILAN, Oct 6 (Reuters) - Euro zone bond yields rose as a government bond sell-off driven by concerns about inflation lingered on Wednesday, although yields gave up much of their earlier rise as U.S. Treasury yields fell by late London trade. Earlier, 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 it, driving a sell-off across bond and stock markets that sent European indexes tumbling more than 1% Germany’s 10-year government bond yield, the benchmark of the bloc, rose as much as 4 bps and hit its highest since the end of June at -0.147%. It edged lower in late trade, following U.S. Treasuries lower after U.S. employment data showed U.S. private payrolls increased more than expected in September, and was up less than a basis point at -0.18% by 1521 GMT. The employment data is in focus ahead of Friday’s U.S. non-farm payrolls data, which will be crucial for investors to gauge whether the U.S. Federal Reserve can announce a tapering of its bond purchases in November. Italy’s 10-year government bond yields rose as much as 7 bps to a similar milestone at 0.928% and was last up 2.5 basis points to 0.88%. Michael Brown, senior market analyst at Caxton FX in London, noted that bond yields came off the day’s highs as U.S. stock markets extended their fall, a move which continued after the ADP data. Brown saw that as helping create demand for safe-haven bonds. Bond yields move inversely with prices. The sell-off pushed Germany’s 10-year breakeven rate - a gauge of inflation expectations based on the difference in yield between nominal and inflation-linked bonds of the same maturity - to its highest since 2013 at 1.755%. Another key market gauge of long-term euro zone inflation expectations rose to its highest since November 2014 at 1.868% but had dropped to 1.80% in late trade.. 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. “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. Reporting by Stefano Rebaudo, additional reporting by Yoruk Bahceli; Editing by Mark Potter and Hugh Lawson Our Standards: The Thomson Reuters Trust Principles.