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

LONDON, Aug 10 (Reuters) - European government bond yields reversed direction and drifted lower on Monday as concerns about the passage of a U.S. fiscal stimulus bill kept investors from aggressively buying riskier assets.

With Tokyo markets closed for an extended weekend and not much important data on the calendar, bonds found little new to feed off with turnover below average in subdued summer trading.

Andy Cossor, a rates strategist at DZ Bank in Frankfurt said likely bond auctions from Italy later this week and German sentiment data on Tuesday might provide some trading triggers.

"Overall, it looks to be a quiet market for today," he said.

Only about 143,000 contracts on benchmark German bond futures had traded in London, less than a quarter of the daily average turnover of more than 600,000 contracts according to Refinitiv data.

Better than expected U.S. jobs data on Friday weighed on bonds with U.S. Treasury yields up nearly 4 bps for the week. That was the first weekly rise in yields after four consecutive weeks of falls.

While German bond yields initially tracked U.S. Treasuries by rising at Monday's open, markets increasingly focused on two major events this week: the passage of U.S. fiscal stimulus and a China-U.S. meeting this weekend.

Though U.S. President Donald Trump signed executive orders on Saturday partly restoring enhanced unemployment payments to the tens of millions of Americans who lost jobs in the coronavirus pandemic, negotiations broke down between the White House and top Democrats in Congress.

Adding to the uncertainty were ongoing tensions between Washington and Beijing. Trump signed two executive orders banning WeChat and TikTok in 45 days' time while announcing sanctions on 11 Chinese and Hong Kong officials.

Benchmark German ten-year bond yields eased 2.2 bps to minus 0.53%, having initially risen as high as minus 0.49%. French and Belgian yields were down by a similar amount.

"There shouldn’t be an important deterioration in the risk sentiment unless we see another round of extended confinement measures and lockdowns that would have an impact on the economic activity," said Ipek Ozkardeskaya, a market strategist at Swissquote.

Spreads between Italian bonds and their German counterparts, an indicator of risk appetite, were at their tightest levels since February, below 150 bps.

(Reporting by Saikat Chatterjee; editing by Larry King, Kirsten Donovan)