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UPDATE 1-ECB data cheers bond markets, Italy, Portugal yields at new lows

* ECB discloses forward-looking redemption data for first time

* To have 130 bln euros from maturing bonds to invest

* ECB buying remained skewed towards France, Italy in Oct

* Italian yields hit 10-month low

* Portuguese yields at lowest since April 2015

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

LONDON, Nov 7 (Reuters) - Southern Europe led a fall in bond yields in the single currency bloc on Tuesday after latest ECB data highlighted that central bank buying will provide considerable support to regional bond markets over the coming year.

Italy's 10-year yield fell to a 10-month low, Portuguese yields tumbled to their lowest level since April 2015, while Germany's benchmark Bund yield remained within striking distance of 2-month lows hit on Monday.

The European Central Bank's decision last month to extend its massive asset purchase scheme until September next year, albeit at a reduced monthly pace of 30 billion euros from January, has helped drive down bond yields in recent weeks.

New data released late on Monday suggests those monthly flows will be closer to 40 billion euros once the ECB reinvests funds from maturing bonds it has acquired under its asset-purchase scheme.

Redemptions will average 10.8 billion euros a month in the 12 months from November.

"Leaving any smoothing aside for now, this (redemption data)implies that purely from a flow perspective the latest QE extension is closer to '9 times 41 billion euros"', said ING senior rate strategist Benjamin Schroeder.

Germany is expected to receive the largest reinvestment flows because the ECB buys bonds in line with the size of a country's economy in what is known as the capital key. It is the bloc's biggest economy and its benchmark bond issuer.

The redemption data adds weight to the price gains in bond markets seen in the wake of the ECB's October meeting, at which the central bank unveiled its extension in asset purchases. When a bond's price rises, its yield falls.

In addition, Monday's ECB data showed that bond purchases in October remained skewed towards countries such as France and Italy. That may help explain the fall in bond yields this session, analysts said.

In a note, Jefferies senior European economist Marchel Alexandrovich said that redemptions next year would also favour France, Italy and Spain.

Italy's 10-year bond yield tumbled 5 basis points to 1.72 percent, its lowest level since early January. That squeezed the gap over German Bund yields to 139 bps, its narrowest since October 2016.

Portuguese bond yields fell 4 bps to below 2 percent for the first time since April 2015, while Germany's 10-year bond yield held near Monday's 2-month low of 0.33 percent.

Other euro zone bond yields were slightly lower on the day.

"Many investors that had expected tapering to be negative for bonds are reassessing that outlook," said Peter Chatwell, head of euro rates strategy at Mizuho.

Speaking on Tuesday, ECB chief Mario Draghi said tackling soured credit weighing on the balance sheets of euro zone banks is a top priority.

(Reporting by Dhara Ranasinghe; Editing by Matthew Mpoke Bigg and Pritha Sarkar)