* Bond yields higher
* Markets brace for hefty supply week
* First full trading week of 2018
* Euro zone periphery govt bond yields http://tmsnrt.rs/2ii2Bqr
LONDON, Jan 8 (Reuters) - Borrowing costs in the euro area nudged higher on Monday ahead of a heavy week of new bond supply across the bloc in the first full trading week of the year.
Germany, Austria, the Netherlands and Italy are expected to sell almost 12 billion euros of bonds this week, while analysts say Portugal could also come to the market with a syndicated bond deal.
January is typically one of the busiest months for new bond supply and that tends to put upward pressure on bond yields as investors cheapen existing bonds to make for new issues.
But analysts said a still benign inflation environment and reinvestments from maturing bonds meant the markets should absorb the new supply with few problems.
Data on Friday showed inflation in the euro area at 1.4 percent year-on-year in December, well below the ECB's near 2 percent target. The core measure of inflation, which strips out food and energy prices, was 1.1 percent.
"The focus this week in Europe will again be on issuance. We do not think this will be particularly challenging for the market to absorb given the cash inflows from German (last week) and Dutch redemptions," said Antoine Bouvet, a rates strategist at Mizuho.
"The weaker-than-expected core euro zone inflation print on Friday added to our conviction."
Most 10-year bond yields in the euro area were 1-2 basis points higher in early Monday trade.
Germany's benchmark 10-year Bund yield was up slightly at 0.45 percent, not far off two-month highs hit last week.
The European Central Bank should set a date to end its asset-buying programme, the head of Germany's Bundesbank, Jens Weidmann, told Spanish newspaper El Mundo.
In recent weeks, hawkish comments from a few ECB policymakers has stoked speculation that the ECB's bond-buying stimulus may well end sooner than expected.
The ECB has pledged to continue buying bonds at least until September. But with economic growth in the euro zone on its best run in a decade and inflation comfortably above 1 percent, it is widely expected to wind down the programme after that.
(Reporting by Dhara Ranasinghe; Editing by Toby Chopra)