Aug 21 (Reuters) - Euro area government bond yields were mixed on Monday as investors balanced expectations for a higher for longer rates scenario against further signs of weakness from German data and some appetite for safe-haven assets due to concerns about China.

Bond prices move inversely with yields.

German producer prices fell more than expected in July, with the decline due primarily to lower energy prices.

Stocks were higher in Europe after stumbling in Asia as China delivered a smaller cut to lending rates than markets had counted on, continuing Beijing's run of disappointingly frugal stimulus steps.

"The narrative of economic resilience pushing up rates emanates from the U.S., where real rates have led the drive higher," ING analysts said in a note to clients.

"There will be little to further that story, given the very few data releases lined up for this week."

Germany's 10-year government bond yield, the euro area benchmark, rose 0.5 basis points (bps) to 2.63%.

U.S. Treasuries were sold in the Asian session and early London trade, led by the long end as investors grew wary that the U.S. Federal Reserve's Jackson Hole summit could lay the foundations for rates to settle higher for longer.

Germany's 2-year government bond yield, the most sensitive to changes in policy rates, was flat at 3.04%.

The German yield curve narrowed its inversion, with the gap between 2-year and 10-year yields at -42 bps.

An inverted curve, usually a reliable indicator of a future recession, means markets are pricing events that would trigger central banks' rate cuts.

European Central Bank Chief Economist Philip Lane said on Friday the euro zone economy would keep growing and is unlikely to experience a deep or sustained recession.

Such a view on the economy, coupled with data showing sticky services inflation supported the idea that policy rates will stay at high levels for an extended period.

Some analysts argued that expectations of accelerating quantitative tightening measures – with the European Central Bank reducing its balance sheet by selling government bonds and increasing outstanding supply – should lead to a fall in long-dated bond prices.

Italy's 10-year yield, the benchmark for the euro area periphery, rose one bp to 4.33%, with the spread between Italian and German 10-year yields roughly unchanged at 168.5 bps. (Reporting by Stefano Rebaudo, editing by Sharon Singleton)