* Recent weak data shrugged aside by ECB President Mario Draghi
* Peripheral bond yields edge higher on outlook hopes
* Eurozone bond yields dip as inflation measures remain subdued (Writes through)
By Saikat Chatterjee and Abhinav Ramnarayan
LONDON, April 26 (Reuters) - Euro zone bond yields dropped sharply on Thursday afternoon as investors who stood on the sidelines ahead of the European Central Bank meeting piled into government debt after an uneventful press conference.
The euro, which rose during ECB President Mario Draghi's press conference, had fallen back to the day's lows by late trade as dollar short positions unwound on strong U.S. economic data.
Draghi said that the euro zone economy remained strong but acknowledged evidence of a "pull-back" from exceptional growth readings seen around the turn of the year.
Euro zone bond yields fell after the press conference, extending their earlier move.
"After the sell off of the past few days, there's been a bit of reluctance to buy before the ECB meeting because of event risk," said Mizuho strategist Antoine Bouvet.
"And Draghi acknowledged the slowdown in economic momentum, and though that is not new news, it would give investors with a long bias an incentive to get back into the market," he said.
Euro zone government debt has sold off in recent days as U.S. Treasury yields rose to the psychologically important 3 percent mark.
But on Thursday, yields in the single currency bloc were lower 3-5 basis points across the board, and Germany's 10-year bond yield was set for its biggest one-day drop in five weeks, down over 4 basis points at 0.59 percent.
"The main takeaway is that nothing has changed in the ECB's policy stance and they remain on course to taper later in the year," said Marchel Alexandrovich, European financial economist at Jefferies.
Southern European government debt yields kept pace with better-rated peers, and Italian, Spanish and Portuguese yields were lower 3-4 bps on the day.
Euro zone stocks gave back some of their earlier gains, to trade up 0.65 percent. Euro zone banks, however, gave back all their earlier gains to trade marginally lower on the day. (Additional reporting by Fanny Potkin, Dhara Ranasinghe and Helen Reid; Editing by Toby Chopra and Peter Graff)