(Updates prices, adds comment) By Marius Zaharia and John Geddie Aug 18 (Reuters) - Euro zone bond yields rose on Tuesday after a surprise increase in British consumer prices eased concerns over the global disinflationary impact of a commodity market rout, while U.S. housing starts rose to near eight-year highs. Oil prices, which have been a key factor behind a drop in yields over the past few weeks, fell towards six-year lows on Tuesday after stock markets tumbled in China, the world's largest energy consumer. But bond investors were relieved that consumer prices in Britain ticked up 0.1 percent in July year-on-year after slipping back to zero in June. Core inflation hit a five-month high. r.reuters.com/pec24w Economists in a Reuters poll had expected inflation to stay at zero, while some had even been forecasting a drop back to the -0.1 percent level hit in April. Britain's 10-year bond yields edged up after the data, erasing an earlier fall, while German yields -- the euro zone benchmark -- followed slowly behind. The concerns over the weakening inflation outlook have ratcheted up expectations of further central bank stimulus in the euro zone, while they could also scupper plans for Britain and the United States to raise interest rates for the first time in nearly a decade. But such prospects have taken the back seat on Tuesday after the UK inflation data. "The UK data would be the main thing to highlight today," said Martin van Vliet, senior rates strategist at ING. "The rise in yields makes sense with the core CPI number going up." German 10-year Bund yields rose 2 basis points to 0.65 percent. Spanish and Italian 10-year yields rose 4-5 bps to 1.98 percent and 1.80 percent, respectively. Portuguese yields rose 9 bps to 2.47 percent. Also pushing yields higher on Tuesday, data in the United States showed housing starts have now been above a one million-unit pace for four straight months and in July they rose to a near eight-year high. Fed Chair Janet Yellen said in July that the economy faced constraints from an underperforming housing market. GREECE STABILITY Concerns around the stability of the Greek government also weighed on peripheral bonds even though Athens is very close to clinching an 86 billion euro bailout deal. The Greek government appears likely to call a confidence vote following a rebellion among lawmakers from the ruling Syriza party over the country's new bailout deal, a move that could lead to fresh elections. "At the moment we haven't seen polls that split out the left platform from the rest of Syriza, so it's very hard to gauge the risks here," said Rabobank strategist Lyn Graham-Taylor. Greek yields were 14 bps higher at 9.29 percent , pausing after a sharp rally in the last week. German Finance Minister Wolfgang Schaeuble -- one of the toughest negotiators in heated talks with Athens last month -- has given a strong backing to the new deal. Germany's lower parliamentary house is due to vote on the aid package on Wednesday, and Chancellor Angela Merkel has tried to reassure sceptical lawmakers that the IMF would take part in the deal -- something Schaeuble called "indispensable". IMF chief Christine Lagarde, who has been pressing euro zone countries to provide Athens with "significant" debt relief, has said the IMF will wait until October to decide whether to participate. (Editing by Keith Weir)

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