LONDON, Aug 15 (Reuters) - Euro zone bond yields rose on

Friday as markets continued to digest Thursday's hot U.S.

inflation print while awaiting the Alaska summit between U.S.

President Donald Trump and Russian President Vladimir Putin.

German 10-year yields were up 6.5 basis points

at 2.77%, while rate-sensitive German 2-year yields

were up 2 bp at 1.96%.

Germany's 10-year yield rose 7 bps on Thursday after U.S.

producer prices (PPI) figures came in above expectations.

"That could really be the reason that this trend is

continuing from yesterday ... the dynamic was driven by the PPI

in the U.S.," said Christian Reicherter, an analyst at DZ Bank.

The stronger-than-expected producer price data renewed

inflation concerns and prompting traders to scale back Federal

Reserve rate cut bets.

The key inflation tracker increased by the most in three

years in July amid a surge in the cost of goods and services,

suggesting a broad pickup in inflation was imminent.

U.S. Treasury yields rose, a move that transferred across to

euro zone markets.

While the dynamic continued into Friday, markets are

generally quiet amid thin summer trading.

Italy's 10-year bond yield rose 8.3 bps to

3.59%, pushing the spread between Italian and German 10-year

yields to 82 bps, the tightest since at least

2011, according to LSEG data.

Elsewhere, traders are assessing Friday's summit in Alaska.

Trump and Putin will hold talks focused on the U.S.

president's push to seal a ceasefire deal in Ukraine, but with a

last-gasp offer from Putin of a possible face-saving nuclear

accord on the table too.

"I don't expect any real outcome there that could have a

huge impact on the markets" said Reicherter.

The White House said the summit would take place at 11 a.m.

Alaska time (1900 GMT).