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UPDATE 1-German yields at highest since Oct ECB meeting as supply cranks up

* Italy, Portugal syndication plans push yields higher

* Bank of Japan tweak puts spotlight on central banks

* Global growth adds to speculation on bond market

* Euro zone periphery govt bond yields http://tmsnrt.rs/2ii2Bqr (Adds quotes, background)

LONDON, Jan 10 (Reuters) - Germany's 10-year bond yield hit its highest level since the October European Central Bank meeting when policymakers first announced the extension of its bond-buying scheme, with one trader citing heavy supply as the trigger for the move.

On top of heavy supply, speculation that the Bank of Japan could start to withdraw stimulus this year has also put upward pressure on bond yields across the world.

With 10-year U.S. Treasury yields reaching 2.57 percent overnight for the first time since March last year, most euro zone 10-year government bond yields were 1-2 basis points higher at the open on Wednesday.

"I believe this move is issuance-related: Italy and Portugal announced syndications overnight and many financials are hitting the screens as well so many international investors are shifting their portfolios to make room for this supply," said DZ Bank analyst Pascal Segesser.

Italy on Wednesday mandated banks to manage the sale of a new 20-year bond, while Portugal mandated banks for an upcoming 10-year bond sale.

In addition, Germany is set to sell 5 billion euros of 10-year bonds in an auction later on Wednesday.

The yield on Germany's 10-year government bond , the benchmark for the bloc, was 2 bps higher at one stage at 0.48 percent.

German Bund futures dropped as much as 30 ticks at the open, briefly touching the 161.00 mark before rising once again to 161.11.

The rise in yields is giving rise to some speculation among investors as to whether this is the start of a sustained bear market for bonds, said Segesser of DZ Bank.

"We have had some strong growth numbers at the start of the year and there's some questions on whether the central banks will finally change their stance," he said.

In fact, Rabobank analysts on Tuesday sent out a research note asking the question: "Have we finally entered a bond bear market?"

The analysts said in the note a global recovery and potential central bank action are possible drivers of a sustained sell off in bonds, though they stopped short of saying that this trend has begun.

As far as monetary policy is concerned, many investors took the Bank of Japan's decision to buy fewer long-dated government bonds than expected this week as one sign of a possible shift in the central bank's stance.

Investors will look for further hints on that front when U.S. policymakers Charles Evans, Robert Kaplan and James Bullard are all due to speak in public.

Ahead of that, industrial production numbers from France will be watched for further signs of economic strength in the single currency bloc.

A sharp rise in oil prices could also be contributing to higher yields, as they tend to push inflation higher.

U.S. crude touched its highest since December 2014, supported by OPEC-led production cuts and expectations that U.S. crude inventories have dropped for an eighth week in a row. (Reporting by Abhinav Ramnarayan, Editing by Jamie McGeever)