UPDATE 1-Euro zone bonds steady ahead of German inflation data

* Polls suggest German inflation of 2.3% for June

* Bund yields hold near recent one-month highs

* EU expected to issue 5-yr and 30-yr bonds

* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr (Adds graphic, updates prices)

LONDON, June 29 (Reuters) – Euro zone government bond yields held steady near recent highs on Tuesday ahead of the release of German consumer prices data, with polls suggesting that inflation in Europe’s largest economy will overshoot the European Central Bank’s target for the bloc.

Investors have been keeping a close eye on inflation figures and what they may mean for continued central bank stimulus. German consumer prices have been above the ECB’s target of just below 2%. A Reuters poll suggests the figure for June, due at 1200 GMT, would be unchanged at 2.3%.

Various German states are due to report inflation figures through the day. The country’s most populous state, North Rhine Westphalia (NRW), has already recorded consumer prices in June up 2.5% from the same month last year.

“Our economists expect the reopening (of economies) to continue to pressure services prices higher and make goods prices more prone to the feed-through of rising input prices,” ING analysts said in a note.

Euro zone government bond yields were briefly higher after the NRW data came out early on Tuesday but settled back to trade flat, hovering near recent highs.

Germany’s 10-year bond yield, for example, was flat at -0.183%; within sight of a recent one-month high of -0.146%, yet not close enough to warrant any concern.

French 10-year bond yields, which fell sharply after far-right politician Marine Le Pen fared badly in regional elections over the weekend, were also steady at 0.16%.

The reason for the subdued mood is that euro zone policymakers have been at pains to show they will not act immediately on any spikes in inflation that they see as transitory or led by oil prices, analysts say.

“The ECB’s assurances mean that there is little that could upset the cart in rates until at least September, when policymakers are again to decide on the pace of asset purchases,” the ING analysts said.

Yet German 10-year yields have risen nearly 40 basis points this year, suggesting that each inflation figure is pointing towards a larger rebound and an eventual clawing back of stimulus.

Later on Tuesday the European Union is widely expected to launch and price its second issuance under the Next Generation EU (NGEU) programme. It is planning to sell five-year and 30-year bonds, with investors expecting it to raise between 15 billion and 20 billion euros ($23.8 billion). ($1 = 0.8404 euros)

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