UPDATE 2-Euro zone bond yields fall from highs as sell-off pauses

* German yields pinned near highs despite troubled G20 meet

Shifting rhetoric from central banks key to bond prices

* Euro zone periphery govt bond yields http://tmsnrt.rs/2ii2Bqr (Writes through)

By Abhinav Ramnarayan

LONDON, July 10 (Reuters) - Euro zone bond yields came off multi-month highs on Monday as investors dipped their toes back into the market after the brutal sell-off of the last two weeks.

Investors dumped government bonds over the past two weeks on the belief that the European Central Bank (ECB) would unwind extraordinary stimulus sooner rather than later.

This pushed yields up to levels where they were starting to look attractive again, resulting in Monday's dip, analysts said.

"It is a retracement after a very strong move over the last two weeks," said Rabobank strategist Richard McGuire.

"With Bunds where they are, you are always going to get some buyers willing to buy (bonds with) zero risk at over 50 basis points."

The yield on Germany's 10-year government bond , the benchmark for the region, was headed for its biggest one-day fall in almost four week, down 4 basis points at 0.54 percent.

But they more than double the 0.25 percent level at which it began on June 27, the day ECB President Mario Draghi opened the door to tweaks in the ECB's aggressive stimulus policy in a speech in Sintra, Portugal.

Strong U.S. employment data on Friday bolstered a feeling that central banks across the world have more reason then ever to continue to unwind the loose policy stance of the post-crisis era.

U.S. 10-Year treasury yields might trade in a 2.50 to 2.75 percent range by the end of the year, Rick Rieder, BlackRock's chief investment officer of global fixed income, said last week.

Meanwhile, the Bank of Japan offered its most optimistic view of the country's regional economies in more than a decade on solid exports and private consumption, underscoring its conviction a steady recovery is gathering momentum.

"Unlike in recent years, where there was very patchy growth across the world, we are seeing a synchronised upswing in the global economy," said Alex Dryden, global market strategist at JP Morgan Asset Management.

"So while it may not be coordinated communication, I do think there's been a change in rhetoric from central banks across the world - though the ECB is the central bank to watch in the second half of the year."

High-rated euro zone bond yields were 2 to 4 basis points lower on Monday. Lower-rated Italian and Spanish government bonds performed even better, falling 5-6 bps.

For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.bi z / c m s / ? p a g e I d = l i v e m a r k e t s

(Reporting by Abhinav Ramnarayan; Editing by Larry King and Ed Osmond)