May 22 (Reuters) - German long-term bond yields hit a

two-month high on Thursday, as investors' concerns around a

worsening fiscal outlook in the United States in particular were

reinforced by tepid demand for a U.S. Treasury auction the day

before.

Investors were also focusing on manufacturing and services

sector surveys for May from the euro zone, Britain and the

United States due later in the day.

Euro zone bond yields edged up modestly across the board,

but longer-term bonds were clear underperformers, with German

30-year yields up nearly 2 basis points at 3.168%,

after initially hitting their highest since mid-March at 3.179%.

In March, German yields surged after a historic change to

the country's borrowing rules and the announcement of a massive

spending programme.

German 10-year yields, the euro zone benchmark,

rose 1 basis point to 2.654%, while the more rate-sensitive

two-year yield was marginally lower at 1.86%.

Worries around the U.S. debt load, fanned by President

Donald Trump's tax bill that is expected to be voted on in the

House of Representatives within hours, have lifted U.S.

borrowing costs this week.

Additional pressure came also from soft demand for a $16

billion sale of 20-year U.S. Treasury bonds on Wednesday, which

followed Moody's removing the country's top-notch credit rating

last week.

Yields on 30-year Treasury bonds were stable

above 5%, after hitting a 1-1/2 year high overnight.

Looking ahead, business activity for the euro zone and

Germany is expected to have been broadly steady from the

previous month.

"Those will be interesting, as they're one of the first

indications we have for how the global economy has performed

this month, particularly given not all of the Liberation Day

impact would have been immediately clear in April," analysts at

Deutsche Bank wrote in a note to clients.

Italy's 10-year yield, seen as the benchmark for the euro

zone periphery, was 1.5 bps higher at 3.66%, while the 30-year

yield was up 2 bps at 4.52%.