Euro zone bond yields rise, stocks fall as US CPI beats expectations

LONDON, Feb 14 (Reuters) - Euro zone government bond yields rose across the board and stocks fell on Wednesday after data showed that U.S. inflation rose more than expected in January.

Consumer prices in the world's largest economy overshot forecasts and a measure of underlying inflation posted its biggest gain in a year, strengthening expectations of a faster pace of interest rate increases from the Federal Reserve.

The yield on Germany's 10-year government bond , the benchmark for the region, reversed earlier falls and was up 2.5 basis points at 0.77 percent. It hit its highest level since September 2015, according to Tradeweb data.

European stocks fell sharply, last down 0.1 percent. The pan-European index was up 0.8 percent prior to the release. Bank stocks reduced their gains to trade up just 0.1 percent on the day.

Germany's DAX stocks index was the worst-hit in the region, trading down 0.9 percent.

The higher-than-expected inflation figure also drove Europe's gauge of stocks volatility up from a one-week low. (Reporting by London Markets Team; Editing by Dhara Ranasinghe)