* Euro zone bond yields little changed
* Market focus fixed on Jackson Hole meeting
* ECB’s Constancio due to speak later in day
* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr
By Dhara Ranasinghe
LONDON, Aug 22 (Reuters) - Germany’s 10-year government bond yield was stuck near one-week lows on Tuesday ahead of a gathering of top central bankers later this week that could shed more on light on the direction for monetary policy.
Bund yields have fallen back from 18-month highs hit in July — shortly after comments from European Central Bank chief Mario Draghi were seen paving the way for a scaling back of the ECB’s massive monetary stimulus in the months ahead.
While a trimming of expectations for tighter ECB policy have help push down bond yields across the euro zone slightly, analysts said there was a reluctance to go further without fresh policy cues.
Those could come later this week with both Draghi and U.S. Federal Reserve head Janet Yellen speaking at the annual central banking conference in Jackson Hole, Wyoming, which begins on Thursday.
Draghi will not deliver a new policy message at the meeting, two sources told Reuters last week. Yet with speculation mounting about when the ECB will signal an exit from its ultra-loose monetary policy, the speech remains a key focus for markets this week.
Draghi is also scheduled to speak on Wednesday, while ECB Board member Vitor Constancio speaks later on Tuesday.
“I wouldn’t exclude the ECB using the opportunity to shift the narrative,” said Benjamin Schroeder, senior rates strategist at ING.
Germany’s 10-year Bund yield was up just 1 basis point at 0.41 percent — within sight of a one-week low hit on Monday. It has roughly halved the more than 30 bps rise seen in the wake of Draghi’s speech in Portugal in late June.
Trade in money market futures also suggest investors have scaled back their expectations for a rate rise.
Markets price in around a 70 percent chance of a rate rise from the ECB by the end of 2018, having last month priced in a hike as early as June next year and a high chance of another move by the end of 2018.
There was some focus on Italy after reports at the weekend that former prime minister Silvio Berlusconi, who leads the centre-right Forza Italia party, has indicated his support for the introduction of a parallel currency.
This highlights concerns about anti-euro sentiment in Italy, the euro zone’s third biggest economy, and political risks facing the country as it heads into elections due next year.
The gap between Italian and German 10-year bond yields is at 163 basis points, up from 2017 lows hit earlier this month at around 152 bps.
For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
Reporting by Dhara Ranasinghe; Editing by Keith Weir