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Bond markets headed for worst month in more than a year

* German bond yields set for biggest monthly since Oct 2016

* Bund yields up 25 bps in Jan

* Euro zone flash inflation data, Fed meeting awaited

* Euro zone periphery govt bond yields http://tmsnrt.rs/2ii2Bqr

LONDON, Jan 31 (Reuters) - Bond markets in Europe and the United States were on Wednesday set to end January with their worst month since late 2016, a sign that the tide for bonds has turned as a stronger world economy spells the end for ultra-easy monetary policies.

Euro zone government bond yields crept down in early trade, with Tuesday's weak inflation numbers from Germany lifting expectations that euro zone-wide inflation data on Wednesday is likely to show that price pressures remain subdued in the bloc.

Still, 10-year bond yields in benchmark issuer Germany are up 25 basis points in January at 0.68 percent and set for their biggest monthly rise since October 2016.

U.S. 10-year Treasury yields, which this week hit their highest since April 2014, have risen almost 30 bps this month. They are poised for their biggest monthly rise since November 2016.

"Monetary policy looks very inconsistent with the level of growth and inflation," said Anujeet Sareen, a portfolio manager at Brandywine Global. "Given the normalization process, the whole bond market looks like it's just not high enough in terms of yields."

Indeed, the jump in global bond yields this month comes against a backdrop of strong economic data, and in the euro zone, comments from European Central Bank officials suggesting that asset purchases may end sooner rather than later.

On Tuesday, data showed the euro zone economy expanded at its fastest rate in a decade in 2017. Dutch central bank chief Klaas Knot meanwhile said the ECB should end its asset buys after September but a short phasing-out period is acceptable.

Germany's bond yield curve is close to its steepest in around six months, with the gap between 2 and 10-year bond yields at around 121 bps versus 106 bps a month ago.

"What bond markets are reacting to is the fact that we're in the strongest growth environment we've had for some time," said Seamus Mac Gorain, senior fixed income portfolio manager at JPMorgan Asset Management. "We are expecting a material rise in bond yields, it's just happening more quickly than investors had anticipated."

Euro zone bond yields fell 1-2 bps on Wednesday ahead of euro zone inflation numbers for January.

Economists polled by Reuters forecast a 1.3 percent price rise year-on-year, versus a 1.4 percent rise a month before.

The Federal Reserve is expected to leave interest rates unchanged on Wednesday while signaling a gradual tightening of monetary policy later this year.

Elsewhere, Germany is scheduled to sell 4 billion euros of five-year bonds later in the day.

(Reporting by Dhara Ranasinghe; Editing by Peter Graff)