* Euro zone periphery govt bond yields http://tmsnrt.rs/2ii2Bqr

LONDON, Jan 11 (Reuters) - Euro zone bond yields jumped later on Monday as the resurgent COVID-19 pandemic soured sentiment across markets, with hopes of further fiscal stimulus under President-elect Joe Biden sending U.S. Treasury yields to 10-month highs.

Morning trading saw yields dip in the euro area with traders holding off from so-called reflation trade as tepid economic growth prospects fuelled expectations the European Central Bank stimulus will remain in place for a longer period.

The market trend shifted abruptly in Europe as Wall Street opened and expectations of a multi-trillion-dollar stimulus plan lifted U.S. 10-year notes yields to 1.134%, the highest since March 2020.

Germany's 10-year Bond yield reversed earlier falls and rose to -0.491%, its highest in two months.

"If U.S. yields continue to march higher, German Bund yields will likely follow,” said Jorge Garayo, a senior rates strategist at Societe Generale. "They will go in the same direction but we will see a limited move in the euro area."

Other 10-year bond yields in the euro zone's higher-rated economies like France and the Netherlands also rose higher by four-five basis points.

Bond strategists said other key themes on the radar were supply, typically heavy at the start of the year. Commerzbank estimates that new issuance in the bloc could top 20 billion euros this week.

Also in focus on Monday was Italy's 10-year bond yield amid political uncertainty in the country. Its gap with Germany's rose to around 103 bps after touching a low of 99 bps on Friday, its narrowest since 2016.

Italian Prime Minister Giuseppe Conte faces a showdown with his coalition partner and ex-premier Matteo Renzi this week that could bring down his government even as it struggles to contain the coronavirus pandemic.

President Sergio Mattarella has called on Italy's ruling parties to approve a European Union recovery plan before dealing with the looming political crisis, Italian newspapers reported on Monday.

(Reporting by Dhara Ranasinghe and Julien Ponthus Editing by Alison Williams and Mark Heinrich)