Euro zone bond yields up on new supply; US, Japanese gains

* Germany, Netherlands and Austria sell bonds on Tuesday

* Yields on all three well up from mid-December

* BoJ buying pattern pushes U.S. Treasury yields up

* Euro zone periphery govt bond yields http://tmsnrt.rs/2ii2Bqr (Recasts with rise in yields)

By Abhinav Ramnarayan and Fanny Potkin

LONDON, Jan 9 (Reuters) - Euro zone government bond yields rose on Tuesday, following a wave of new debt issuances from the bloc's top-rated issuers and a rise in U.S. and Japanese yields.

Ten-year U.S. Treasury yields hit a 10-month high and 20-to-40 year Japanese government bond (JGB) yields set one-month highs after the Bank of Japan (BoJ) trimmed the amount of its JGB purchases, fuelling talk the central bank may wind back monetary stimulus this year.

"The fear of this being a prelude to BoJ reduction in purchases is misplaced, but it did move the market this morning along with the strong Japanese wages data," said Mizuho strategist Antoine Bouvet.

The sell off in U.S. and Japanese bond markets put upward pressure on euro zone bond yields on a day when three countries in the bloc held their first auctions of 2018 and Portugal and Italy announced syndicated bond deals.

Germany, the Netherlands and Austria sold more than 3.5 billion euros ($4.2 billion) of bonds between them, receiving strong demand from investors.

Italy mandated banks to manage the sale of a new 20-year bond, while Portugal also mandated banks for an upcoming 10-year bond sale.

"With (Other OTC: WWTH - news) the announcement from Portugal that was quite well-flagged, and Italy following suit with a 20-year benchmark, (that) created a lot for the market to digest," said Michael Leister, rates strategist at Commerzbank (Xetra: CBK100 - news) .

"What we are seeing now is simply the market struggling to defend the levels it had been trading before."

In late trade, euro zone bond yields were 2-5 basis points (bps) higher on the day - led by Italy.

Italy's 10-year bond yield was up 5 bps at 2.03 percent , pushing out the gap over benchmark German Bund yields to 158 bps from 155 bps on Monday.

German 10-year bond yields were up 2.5 bps at 0.45 percent, well above the mid-December level of 0.30 percent.

The Dutch equivalent was 2 bps higher at 0.55 percent but was about 18 bps higher than its December low, while Austria has seen its 10-year borrowing costs increase 18 bps over the past month to 0.59 percent.

In a continuation of a recent trend, southern European debt outperformed, and the gap between Spanish and German bond yields was at its tightest since September.

Normally, an improvement in economic conditions would cause investors to be cautious about buying government bonds as it makes an early end to the European Central Bank's bond-buying scheme more likely.

But with inflation yet to show a sustained increase, investors would feel reasonably safe buying debt.

"To me, the current Bund yield level makes sense given economic data looks rock solid. The only thing we're all waiting for is signs of inflationary pressure," said Martin van Vliet, senior rates strategist at ING.

($1 = 0.8384 euros)

(Reporting by Abhinav Ramnarayan and Fanny Potkin; Writing by Dhara Ranasinghe; Editing by Mark Potter)