LONDON, Feb 3 (Reuters) - The euro and government bond yields across the euro area shot higher on Thursday as comments from European Central Bank President Christine Lagarde on inflation outlook fuelled market angst over the monetary policy outlook.
Speaking at a post-meeting news conference, Lagarde said inflation was elevated for longer than expected and that most measures of underlying inflation have risen.
The euro EUR=EBS vaulted almost 0.8% higher at $1.1361 EUR=EBS .
Southern European bonds, the primary beneficiaries of ECB stimulus, bore the brunt of the sell off in bond markets.
Italy's 10-year bond yield jumped as much as 13 bps to 1.58%, the highest since June 2020 and the biggest daily jump this year.
Spanish and Portuguese yields jumped to similar highs. ES10YT=RR PT10YT=RR .
In Germany, two-year bond yields were up 7 basis point on the day at -0.33% DE2YT=RR having hit their highest levels since 2016. Ten-year Bund yields rose to 0.109% DE10YT=RR , its highest level since 2019.
The closely-watched gap between 10-year Italian and German yields widened to 144 bps, the highest in a week.
Sterling meanwhile extended losses versus the euro, falling 0.4% at 83.6 pence EURGBP= .
