LONDON (Reuters) – Short-dated British government bond yields hit their highest level since April 2020 on Wednesday, rising alongside U.S. Treasury yields and European share prices after the U.S. Senate passed a massive infrastructure bill.

Two-year gilt yields rose as high as 0.176% at the market open, close to levels last seen during a period of market turmoil at the start of the COVID-19 pandemic which prompted the Bank of England to restart its bond purchase programme.

As of 0814 GMT, they had cooled to 0.167%, up just over a basis point on the day.

Short-dated gilt yields have risen sharply over the last couple of weeks, fuelled by stronger-than-expected inflation indicators, signals from central banks that a withdrawal of stimulus is in the pipeline, and continued fiscal support.

On Tuesday, the Democratic-controlled U.S. Senate on Tuesday passed a $1 trillion infrastructure bill.

European shares also hit record highs on Wednesday and were on track for their longest winning streak in two months, adding to an already upbeat investor mood over a strong earnings season.

Ten-year gilt yields were up 2 basis points on the day at 0.61%.

U.S. consumer price inflation data, due at 1230 GMT, will be closely watched by fixed income investors trying to price the outlook for interest rates.

(Reporting by Andy Bruce, editing by David Milliken)