* Euro zone periphery govt bond yields http://tmsnrt.rs/2ii2Bqr (Updates prices, adds quote)
By John Geddie and Fanny Potkin
LONDON, Oct 24 (Reuters) - Europe's benchmark government bond yield reached a two-week high on Tuesday after strong economic data helped convince some investors the European Central Bank is plotting a change to its ultra-easy monetary policy approach.
Analysts say strong business and bank lending surveys provided more evidence that the ECB will announce a trimming of its monthly bond purchases at its meeting on Thursday, though with an accompanying extension of the scheme.
German 10-year yields rose more than 3 basis points to 0.47 percent, their highest since Oct 12 and well clear of a five-week low of 0.35 percent struck on Oct 17. All other euro zone yields were 1-3 bps higher on the day.
"We see a quite benign economic environment and that is one driver for the rise we saw this morning," DZ Bank strategist Christian Lenk said.
"It's two days ahead of the ECB meeting and the market is more nervous than usual. That's why it caused such a significant reaction."
The bloc is enjoying the best growth momentum in a decade, and monthly surveys on Tuesday indicated a business rebound in its biggest economies was showing no signs of stopping.
Activity in the French private sector rose more than expected in October while German businesses posted the highest increase in new orders in 6-1/2 years, PMI surveys showed.
Private sector growth across the euro zone stayed strong even though firms increased prices at the steepest rate in over six years.
The ECB's quarterly bank survey, also released on Tuesday, showed a continued trend of demand-driven loan growth that banks expect to continue till the end of 2017.
Inflation remains the big headache for policymakers, however. At 1.5 percent it remains well below the ECB's target of almost 2 percent. Expectations are for it to stay that way at least until 2019.
Economists polled by Reuters expect the central bank to say on Thursday it will start cutting monthly purchases to 40 billion euros from 60 billion euros in January. They were split on whether the programme would last six or nine months after that.
"Many pundits hold a bearish bias on rates and spreads going into the ECB meeting, suggesting it doesn't take much for Draghi to trigger a risk-on rally," said Padhraic Garvey, global head of debt and rates strategy at ING.
For Reuters Live Markets blog on European and UK stock markets see: reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Additional reporting by Fanny Potkin; editing by John Stonestreet)