UPDATE 1-Euro zone bond yields rise from five-week lows, ECB in spotlight

* Euro zone bond yields rise across board

* ECB's Draghi, Praet and Coeure scheduled to speak

* U.S.-German two-year yield gap close to widest since 1999

* Euro zone periphery govt bond yields - http://tmsnrt.rs/2ii2Bqr (Recasts, writes through)

LONDON, Oct 18 (Reuters) - Bond yields across the euro area rose on Wednesday, as a note of caution set in after a run of sharp falls over the previous three sessions pushed borrowing costs in much of the region to five-week lows.

That move lower was driven by expectation that the European Central Bank (ECB), which meets next Thursday, could signal a prolonged scaling back of its monetary stimulus scheme.

Reuters reported last week that policymakers are broadly in agreement about extending asset purchases at a lower volume, with views converging on a nine-month extension.

Officials including ECB chief Mario Draghi, Chief Economist Peter Praet and executive board member Benoit Coeure were on the line-up for Wednesday. But in the absence of any fresh drivers, the bond price rally that has pushed down yields petered out.

Easy monetary policy gives euro zone governments a window of opportunity to enact reforms, Draghi said.

Germany's 10-year bond yield was up 2 basis points (bps) at 0.38 percent, pulling back from five-week lows hit on Tuesday at around 0.35 percent.

Across the euro area, yields were 1-4 bps higher on the day. Italian yields climbed from five-week lows briefly touched earlier at 2.01 percent.

"We have been drifting lower in the past few days and now there is a bounce in yields, which makes sense to me," said ING senior rates strategist Martin van Vliet. "We are now looking at a paralysis in markets ahead of the ECB meeting."

A growing view that ECB asset purchases will go on lower for longer comes at a time when markets are positioning for further U.S. rate increases, pushing two-year U.S. Treasury yields to nine-year highs this week.

That divergence has stretched the gap between U.S. and German bonds in recent days.

The difference between 10-year bond yields in the United States and Germany is about 194 bps and close to its widest in four months.

The gap between short-dated U.S. Treasury yields and their German counterparts is about 229 bps and close to its widest in 18 years.

"We would point at the acceleration of the UST-Bund widening this week as evidence that the policy divergence trade is setting in and that euro zone government bonds can rally further," Mizuho analysts said in a note.

Political noise from Spain and Portugal helps to explain underperformance of peripheral government bonds, analysts said.

Portugal's interior minister resigned on Wednesday after more than a hundred deaths from forest fires and the government faces a no-confidence vote over its handling of the fires.

Spain meanwhile appealed to Catalan leader Carles Puigdemont to "act sensibly" on Wednesday, 24 hours before a government deadline for the region to renounce a bid for independence.

(Reporting by Dhara Ranasinghe; Editing by David Goodman)