UPDATE 1-Euro zone bond yields creep up, Bund yields hover near 6-week high

* Bond yields nudge higher as risk aversion abates

EZ labour costs rise at fastest pace in 6 years

* S&P to review Portugal's ratings

* Euro zone periphery govt bond yields http://tmsnrt.rs/2ii2Bqr (Updates prices, adds EZ wage cost data, Portugal review)

By Dhara Ranasinghe

LONDON, Sept 14 (Reuters) - Borrowing costs in the euro area edged up on Friday, with German bond yields hovering near six-week highs a day after the European Central Bank confirmed that its monthly asset purchases will be halved come October.

Demand for safe-haven bonds such as Germany's was also dented by hopes for a new round of trade talks between the United States and China and after a decisive interest rate hike in Turkey on Thursday bought some calm to emerging markets.

Analysts said Thursday's ECB meeting was not as dovish as some investors had anticipated, with growth forecasts trimmed rather than cut sharply while the bank also noted a pick-up in wage pressures.

The ECB lowered its growth projections by 0.1 percent for the next two years. It also cut its underlying inflation forecasts for next year and 2020, while maintaining its overall price growth forecast.

Euro zone labour costs rose at their steepest rate in almost six years in the second quarter of 2018, data on Friday showed.

Ten-year euro zone bond yields were generally around one basis point higher on Friday.

"The ECB staff forecasts showed only a trimming of growth expectations, not the downgrade of risks to the outlook that the market had been told to expect," said Peter Chatwell, head of rates strategy at Mizuho.

"Our interpretation of the forecasts is that they tell a story of a euro area economy which is still growing comfortably and where headline inflation is likely to remain close enough to target for the central bank to be hiking rates in September 2019."

Money market pricing suggests the ECB is more likely to raise rates in October next year and almost certainly will have delivered one 10 basis point hike by the end of 2019.

The rise in euro are yields included Italy, where yields moved in the opposite direction to those on higher-rated bonds recently with worries about Rome's spending plans hurting Italian debt but lifting German bonds.

Germany's 10-year bond yield rose 1.5 bps to 0.439 percent -- within sight of Thursday's six-week highs.

DZ Bank strategist Andy Cossor said signs of progress on U.S./China trade talks and Turkey's rate hike, which had boosted demand for risk assets, helped explain the slightly bearish tone in major bond markets.

U.S. 10-year Treasury yields hit six-week highs at 2.987 percent.

"Risk factors that have been worrying us have became less worrying in the last 24 hours," said Cossor.

Portugal was also in focus ahead of a S&P ratings review, coming a year after it became the first of the big three credit agencies to lift Portugal back to investment grade on an improving economy and public finances.

Commerzbank said another upgrade looked premature, though a positive outlook change was possible.

(Reporting by Dhara Ranasinghe; editing by John Stonestreet)