ANALYSIS-Central bank heavyweights head back to euro government debt

* China, Norway banks among main euro debt buyers -sources

Euro share of global reserves low but forecast to rise

* Outlook for dollar, U.S. Treasuries uncertain

By Abhinav Ramnarayan and Tommy Wilkes

LONDON, April 10 (Reuters) - Major global central banks are ramping up purchases of euro zone government bonds, banking sources say, enticed by rising yields, a buoyant single currency and an uncertain outlook for U.S. debt and the dollar.

Data shows central banks bought significant chunks of debt issued by Belgium, France and state-backed German development bank KfW in bond syndications last month.

Two senior bankers who conduct such syndications on behalf of European governments told Reuters the central banks of China and Norway have been particularly active.

"We have seen a general pick-up in central bank buying, though it has very much been led by the two big ones - Norway in Europe and China in Asia," one of the bankers said.

"Norway behaves very much like a hedge fund so it is an investment call for them, whereas for China it is about finding some options other than U.S. Treasuries," the person said, speaking on condition of anonymity.

Given their firepower and importance in financial markets, central banks' purchases are closely watched. China's foreign exchange reserves stand at $3.143 trillion and the Norges Bank's Investment Management arm has $1.08 trillion of assets, according to latest figures.

The People's Bank of China did not immediately respond to a request for comment. A spokesman for the investment division of Norway's Norges Bank said it did not comment on individual investments.

European government bonds have grown in popularity because yields have risen this year from record lows on expectations the European Central Bank is ending its quantitative easing programme as the economy rebounds.

Concerns about the weakness of the dollar and the outlook for Treasuries have increased also increased after the Donald Trump administration said it would welcome a weaker currency and as the United States embarks on a huge debt-raising drive.

An adviser to China's central bank said on Monday it should make better use of the country's funds by looking to invest its capital reserves in real assets, not U.S. Treasury bonds.

ACCELERATING TREND

The euro zone debt crisis drove central banks out of the single currency from 2009 and into the safety of the dollar, which according to International Monetary Fund data accounts for 63 percent of global central bank reserves.

The euro's share meanwhile dropped from a peak of 28 percent to below 20 percent.

In the last quarter of 2017 it edged back, however rising to 20.15 percent - its highest level in three years according to the IMF - and data from European government bond sales shows that trend has accelerated in 2018..

Central banks tend to buy between 5 and 15 percent of longer-dated syndicated European government bonds.

But this year they hoovered up 20 percent of a 5 billion euro 10-year Belgian bond in January and 26 percent of a 15-year Belgian issue in March.

"The participation from central banks has been very noticeable this year," said Anne Leclercq, the head of the Belgian debt agency.

"Usually they are interested in maturities of up to 10 years, but even on our 15-year bond there was a lot of demand," she added, while declining to comment on individual investors.

Central banks also bought 43 percent of a 4 billion euro five-year bond sale by Germany's KfW, whose Treasurer Frank Czichowski said at the time the bond reached its target size in part because of strong demand from European and Asian central banks.

France has also seen an uptick, selling 9 percent of an inflation-linked bond maturing in 2036 to official institutions, more than double what it sold them in a January 2017 transaction.

European governments will welcome greater participation from central banks, who tend to be reliable holders of their debt, and the euro could also benefit.

The return of private money from fund managers and foreign direct investors into European markets has pushed the currency to a three-year high against the dollar and spread broader optimism about the region's economic recovery.

Analysts at Citi said that as the ECB begins to cut bond purchases and raise interest rates, the resulting higher yields could lure a flood of money.

Citi estimates that if reserve managers raise their share of reserves in euros to even half the 2009 peak, that would require 392 billion euros of buying.

"We may have entered into a longer-term downward dollar trend," said Derek Halpenny, MUFG's European head of global markets research.

"If that is confirmed then I think that means an increase in appetite for euros, simply because there is no alternative."

($1 = 0.8124 euros)

(Writing by Tommy Wilkes, Reporting by Abhinav Ramnarayan and Tommy Wilkes, Additional reporting by Elias Glenn in BEIJING Editing by Sujata Rao and John Stonestreet)