(Adds details, updates prices) Oct 21 (Reuters) - Euro zone bond yields resumed their rise on Thursday after a brief respite from a sell-off that has gripped government bond markets. Government bond yields across developed markets have shot up in recent weeks following hawkish turns from the U.S. Federal Reserve and the Bank of England (BoE). Further commentary from the BoE warning of the risks of inflation prompted investors to bet aggressively earlier this week on an interest rate rise before the end of this year, pushing shorter-dated yields higher and longer-dated yields lower, flattening yield curves . Though the European Central Bank’s economic outlook suggests it won’t be able to raise rates for years to come, given the correlation between bond markets, those moves have also pushed euro zone rates higher and money markets have started to price a full ECB rate hike next year. Markets showed brief signs of recovery on Wednesday and earlier on Thursday, but yields were back on the ascent later in the session. Following UK government bond yields, which led the move, and U.S. Treasury yields higher, Germany’s 10-year government bond yield, the benchmark for the euro area, rose closer to its May highs. By 1514 GMT, it was up 3 basis point to -0.092%. The German yield curve also resumed its flattening on Thursday as 30-year yields were last broadly flat on the day. ‘DEGREE OF SCEPTICISM’ A key market gauge of euro zone inflation expectations, the five-year, five-year breakeven inflation forward, rose as high as 1.9728%, the highest since mid-September 2014, as oil prices surged to a three-year high. “I think (it’s) mostly a continuation of recent trends, with also the rise in inflation breakevens pushing yields higher and gilt supply not helping,” said Antoine Bouvet, senior rates strategy at ING. He was referring to the UK’s issuance of 6 billion pound green bond, which likely put pressure on gilt yields. Another driver was a fall in “real” yields on inflation-linked bonds while nominal bond yields rose. Breakeven inflation gauges measure the difference between the two. “Real yields are a tough one to call. I think they are a result of rising inflation expectations... but also a degree of scepticism when it comes to central banks’ ability to hike rates without denting growth,” Bouvet added. Elsewhere, ECB policymaker and Bank of Italy governor Ignazio Visco said on Thursday the European Union should consider creating a sinking fund to manage public debt accumulated by member states during the pandemic. In bond auctions, Spain raised 5.05 billion euros from six- and 16-year bonds. France raised 7.49 billion euros from four- and five-year bonds, and another 1.75 billion euros from inflation-linked bonds. (Reporting by Yoruk Bahceli, additional reporting by Danilo Masoni; Editing by Mark Heinrich and Gareth Jones)