* German 10-year yield now 7 bps off last week's high
* Most core euro zone yields 1-2 bps lower on day
* Italy prepares for sale of bonds including 30-year
* Euro zone periphery govt bond yields http://tmsnrt.rs/2ii2Bqr
LONDON, Feb 13 (Reuters) - German government bonds were in demand on Tuesday as recent multi-year highs on yields on either side of the Atlantic proved attractive for some investors.
Yields have risen across major developed markets on a recovering global economy and on expectations central banks will tighten policy faster than previously thought.
However, this means that high-grade bonds now have moved to attractive yields in a very short period of time and this would still create demand on some days when economic and policy news is thin, analysts said.
"I think what we are seeing is a little bit of a consolidation," said DZ Bank strategist Christian Lenk. "Given the pace of the move so far, we had to take a break somewhere and we have reached that region now."
Germany's 10-year government bond, the benchmark for the bloc, fell by almost 2 basis points to 0.73, its lowest on the day, and coming further away from the 2-1/2 year high of 0.81 percent hit last week.
This after the yield on 10-year U.S. Treasuries dropped 3 bps to 2.82 percent, moving away from four-year highs hit on Monday.
German 10-year borrowing costs have risen sharply over the past two months, more than doubling from the 0.307 percent level in early December.
Most other better-rated euro zone bond yields were also down 1-2 bps.
Later on Tuesday, Italy kicks off one of the most hefty weeks of supply this year so far by offering up to 7.75 billion euros in bonds due in October 2020, November 2024 and March 2048.
Investors will keep an eye on demand for the 30-year bond in particular.
The yield on this debt has actually fallen since the start of the year as investors pick up the extra yield on offer, ignoring upcoming political risk as the country prepares for a general election on March 4.
Overall this week, analysts are expecting over 20 billion euros of supply from euro zone governments.
Italy's 10-year bond was flat on the day ahead of the auction at 2.029 percent, while the 30-year was up 2 bps at 3.09 percent.
Markets are watching the UK's inflation data (due at 0930 GMT) after the BoE surprised investors last week when it said interest rates would probably need to rise sooner and by slightly more than it had previously signalled. (Reporting by Fanny Potkin and Abhinav Ramnarayan; Editing by Raissa Kasolowsky)