* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr (Recasts lede, updates prices)

MILAN, April 9 (Reuters) – Euro zone government bond yields rose on Friday, tracking moves in U.S. Treasuries amid doubts about the ECB’s efforts to keep nominal interest rates low.

Italian government bond borrowing costs jumped more than their peers on concerns about rising domestic debt and possible delays in the EU recovery fund.

A decision by the German constitutional court last month to stop the ratification of the European Union’s Recovery Fund prompted investors to price some risk into peripheral bonds.

The ECB warned on Friday against a failure to proceed with the European Union’s Recovery Fund, saying such a step would be an “economic disaster for Europe” .

“It’s a combination of drivers, for sure ECB’s officials talking about possible delays in EU recovery fund is one of them,” said MFS fixed-income research analyst Annalisa Piazza, referring to Italian yield jump.

“But the Italian government seems to be ready to increase the deficit to support the Italian corporate sector hit by the last leg of lockdown measures,” she said.

According to a media report, Prime Minister Mario Draghi planned to borrow up to $48 billion more.

Italy’s 10-year bond yields rose 7.5 basis points, after hitting its highest since early March at 0.75%.

The spread between German and Italian bond yield was up 2.4 basis points to 102.6.

Meanwhile, U.S. yields remained in the driving seat of the world’s debt market, with 10-year Treasury yields rising 2 basis points to 1.65%.

They fell on Thursday after dovish comments from the Federal Reserve and weaker-than-expected data.

Germany’s 10-year government bond yield was up 3.5 basis point to -0.3%.

European Central Bank policymakers at their meeting last month agreed to front-load its bond-buying this quarter on condition it could be cut later if conditions allow, the accounts of their meeting showed on Thursday.

“The latest ECB minutes did not suggest a firm conviction that the central bank needs to suppress rates at all costs,” ING analysts said.

Minutes showed that “all of the Governing Council supported the move to use the flexibility built into PEPP to increase the pace of bond purchases, provided that the size of the overall PEPP envelope was not on the table,” according to Deutsche Bank.

“The hawks are stretching their wings by making this the price of their support,” Deutsche Bank analysts said.

Looking at the broader picture, “there is little to suggest that the reflation theme will fade quickly,” Citi analysts said.