By Alun John

Euro zone bond yields inched up but stayed near their lowest since early March on Monday as the recent plunge in oil prices towards $70 a barrel has eased inflation worries - welcome news for central bankers about to gather at the ECB's Sintra Forum.

European Central Bank President Christine Lagarde opens the forum on Monday evening, and the most closely watched panel will be on Wednesday, featuring new U.S. Federal Reserve chair Kevin Warsh as well as Lagarde and the heads of the Bank of England and Bank of Canada.

Investors will be watching closely for any hints about central bankers' assessment of the state of the economy and how they see policy developing in the coming weeks and months.

Markets have scaled back their bets on the scale of interest rate increases they expect from the ECB and Bank of England since the interim ceasefire between Iran and the U.S., which reopened the Strait of Hormuz. That sent oil lower and, with that, inflation expectations.

Those expectations will be tested this week with inflation data for June due from Germany and France on Tuesday and the euro zone on Wednesday.

Ahead of that, Germany's 10-year bond yield rose 1 basis point to 2.86% on Monday. The euro zone benchmark dropped as low as 2.83% last Friday, its lowest since March 10. (DE10YT=RR)

Italy's 10 year yield was flat at 3.60%, again around its lowest since mid March. France's rose 2 bps to 3.65%. TVC:IT10Y, (FR10YT=RR)

Also helping bonds to rally last week were remarks from Lagarde that the inflation shock facing the euro zone was too large to ignore but was not yet large enough to push up longer-term price bets or generate dangerous second-round price effects.

Yields fell on that though some analysts wonder if traders had read a more dovish message from those remarks than Lagarde had intended.

"If markets have indeed read too much into these latest comments, they may be in for a hawkish surprise at Lagarde's key Sintra speech on Monday," said Deutsche Bank analysts in a note.

They said Lagarde could highlight the inevitability of some indirect inflation after four months of energy shock or use the speech to correct the interpretation of her stance.

"This could lead to a repricing in rate expectations," they said.

The ECB raised rates earlier this month. Markets are fully pricing one more 25 basis point move by October, but only see a one in five chance of a third move by the end of the year.

Germany's rate-sensitive two-year yield was up 2 bps at 2.54% (DE2YT=RR), but also still near a two-month low hit on Friday.