UPDATE 3-Inflation acceleration in Germany keeps euro zone bonds on edge

(Adds analyst comment, background)

LONDON, Sept 30 (Reuters) - Sovereign bond markets across the euro area looked set on Thursday to end September with the biggest jump in borrowing costs in months as investors brace for higher inflation and a more hawkish response from the world’s major central banks.

And with data on Thursday showing inflation in Germany - Europe’s biggest economy - accelerated at a record pace in September, bond yields edged back up to roughly three-month highs hit earlier this week.

Signs that inflation could prove stickier, combined with a hawkish shift at the U.S. Federal Reserve and the Bank of England, have put markets on alert that central banks could wind back post-COVID stimulus measures sooner rather than later.

“Today’s German and French inflation data are adding pressure towards a less accommodative monetary policy,” said Massimiliano Maxia, senior fixed income specialist at Allianz Global Investors.

“I think markets want to see Germany’s 10-year government bond yield at zero,” Maxia added.

In Germany, the euro zone’s benchmark bond issuer, 10-year bond yields were up 2 basis points at -0.193%.

They have risen 18 bps this month -- the biggest monthly jump since February.

French and Dutch 10-year bond yields have also risen about 18 bps each this month in their biggest monthly rises since April.

U.S. Treasury yields stabilized on Thursday, with the 10-year falling half a basis point to 1.53%, as investors looked for progress on budget talks in Washington and rebalanced portfolios at the end of September.

“Every move we have seen since last week has been led by changing monetary policy expectations,” said Althea Spinozzi, senior fixed income strategist, Saxo Bank.

“It is becoming clearer that central banks will need to implement tighter monetary policies at a faster pace than markets had been pricing for before, especially in the U.S.”

Similar moves have been seen across major bond markets as investors brace for tighter monetary policy. British debt has been the big underperformer, with 10-year gilt yields up almost 40 bps in September.

Fresh signs that high inflation in the euro area could last longer than policymakers had anticipated kept the focus on inflation, preventing a recovery in debt markets for now.

French inflation hit a near 10-year high of 2.7% in September, official data showed, though slightly below forecast.

German consumer prices, harmonised to make them comparable with inflation data from other European Union countries, rose by 4.1% year-on-year compared with 3.4% in August.

That was the highest rate recorded since January 1997, when the EU-harmonised series began.

“Germany’s inflation acceleration continues and will put more pressure on the European Central Bank’s December debate on how to proceed with its asset purchases next year,” ING analysts said in a report.

Reporting by Dhara Ranasinghe, additional reporting by Stefano Rebaudo; Editing by Hugh Lawson