Euro zone government bond yields rose on Monday after preliminary inflation data from the bloc turned out to be stronger than expected, while risk appetite grew across financial markets.

Consumer prices in the German state of North Rhine-Westphalia in May were 8.1% higher than a year earlier, above expectations for the German consumer price index.

Driven by climbing energy prices, German import prices were 31.7% higher in April than a year before year, the most substantial increase since September 1974.

The pan-German consumer price data will be published later on Monday, and numbers from the euro area are due on Tuesday.

Meanwhile, risky assets were rising after the news that Shanghai authorities would cancel many conditions for businesses to resume work from Wednesday.

If May's consumer price inflation is higher than April's figure, "this would represent inflation still heading in the (hawkish) direction for the European Central Bank (ECB), and euro rates curves flattening would be the most likely result," Mizuho strategists said.

Germany's 10-year government bond yield rose 5 bps to an almost one-week high of 1.015%.

The spread between Germany's 2-year and 10-year bond yields tightened by 2 bps to 60 bps.

"We still expect 10y Bunds to stabilise further near 1% and suggest using setbacks on today's inflation data to scale into tactical longs given looming flow support from benign net supply and a solid index extension this week," Commerzbank analysts said in a note to clients.

The ECB should raise interest rates by 25 basis points (bps) in July and September and is committed to preventing fragmentation within the limits of the bank's mandate, ECB dove Philip Lane told a Spanish newspaper. Fragmentation is a widening of the yield spread between the bonds of core countries, such as Germany, and the periphery, which could hamper the transmission of monetary policy.

Recently spreads declined as fears of an aggressive monetary tightening, starting from a 50 bps rate hike in July, faded. Most-indebted countries benefit the most from a low-interest-rate environment.

The ECB believes an anti-fragmentation tool is not essential, as hiking rates is not so risky that "we need to prepare for damage control ex-ante," according to research notes from banks quoting media sources.

Italy's 10-year government bond yield rose 7 bps to an almost one-week high of 2.063%, with the spread between Italian and German 10-year bond yields widening 2 bps to 193.

(Reporting by Stefano Rebaudo, editing by Bradley Perrett)