(Updates prices, adds University of Michigan data) LONDON, Oct 15 (Reuters) - Euro zone government bond yields rose on Friday, at the end of a volatile week that saw them first hit multi-month highs then ease back as investors struggled to work out the extent to which rising energy prices would feed into inflation and growth. German 10-year Bund yields were on track, however, for their first weekly fall after seven straight weeks of gains that saw yields climb steadily from -0.5% at the end of August , lifted by strong inflation figures and signs of robust economic growth. Yields edged higher after data showing U.S. September retail sales rose 0.7%, marginally below the 0.9% registered in August but well above the 0.2% fall forecast.. They shrugged off a University of Michigan survey indicating weaker consumer sentiment and a fall in inflation expectations. U.S. 10-year Treasury yields rose 4.4 basis points to almost 1.57%, rising off 9-day lows hit on Thursday. The retail data might assuage some concerns around “stagflation” - a rise in consumer prices without a commensurate increase in economic growth - which have left investors confused about whether monetary policy tightening might happen sooner than central banks are signalling. Those fears had driven euro zone government bond yields to five-month highs earlier in the week, only to be followed by two sessions of steep drops when concerns grew that high energy prices would crimp growth. EXPECTATIONS Higher-than-anticipated gas import bills shrank the euro zone’s unadjusted trade surplus in August, data showed. “This week’s bond rally makes the recent sell-off feel more like a pause in investors’ love story with fixed income products than a serious break-up,” ING analysts said in a note. “Markets are rightly concerned about Fed tightening but we lack a near-term catalyst to bring rates higher.” Inflation expectations have risen in recent weeks, with a market gauge of long-term euro zone inflation, the five-year, five-year forward inflation swap, hitting a seven-year high of 1.8694% this week. But much of the expectations stem from supply chain disruptions and a rise in energy prices around the world, which suggests that policymakers may be reluctant to endanger a global economy only just recovering from the COVID-19 crisis. European Central Bank President Christine Lagarde said on Thursday that Europe’s inflation upswing is temporary, with no signs that they are becoming embedded in wages. German government bond yields, having hit a high of -0.08% earlier this week, were last at -0.175%, up 2.5 bps on the day. There was some good news from Germany, where the centre-left Social Democrats and two smaller parties plan to move into formal coalition talks, raising hopes that a government could be formed relatively soon. Other euro zone bond yields were also 2 to 3 bps higher on the day, having fallen anywhere between 7 and 12 bps over the previous two sessions. Reporting by Abhinav Ramnarayan; Additional reporting by Sujata Rao; Editing by Toby Chopra and Gareth Jones Our Standards: The Thomson Reuters Trust Principles.