EMERGING MARKETS-LatAm FX weakens on higher French yields

* French 10-year bond yields at highest since Nov. 30

* Brazil real, Mexico peso weaken vs dollar

* Colombia peso little changed, Peru sol slips

By Jeb Blount and Jean Luis Arce

RIO DE JANEIRO/MEXICO CITY, Jan 5 (Reuters) - Brazil's real weakened against the U.S. dollar on Thursday, leading a slide in Latin American currencies, as European sovereign borrowing costs rose, raising concerns about government defaults, lower bank lending and a slower world economy.

The real slipped 0.73 percent to a bid price of 1.8397 to the dollar. Mexico's peso shed 0.14 percent to 13.73, and Chile's peso gained 0.196 percent to 510.0.

"After the debt sale today it looks more and more like France will lose its triple-A debt rating," said Andre Perfeito, chief economist with Gradual Investimentos, which manages about $1.1 billion of assets in Sao Paulo.

"This is a situation that helps the dollar at the expense of Brazil and other emerging markets," he said.

French 10-year bond yields , a measure of the country's borrowing costs, rose to 3.46 percent, its highest since Nov. 30, after the government sold 7.96 billion euros ($10.3 billion) of 10-year to 30-year bonds in the country's first debt auction of 2012.

Every 1 percentage point increase in debt costs adds 100 million euros of annual interest payments to every 10 billion euros of debt, forcing the government to cut spending or borrow more to compensate.

Higher yields also mean bond prices fall, reducing the value of government debt owned by banks. Banks use these bonds as collateral from money markets and other banks to finance their own lending.

With the price of collateral falling, banks have seen funding dry up or become more expensive, forcing them to cut their own lending to the economy at large. This reduces economic activity.

Slower economies mean less tax revenue for governments, further reducing their ability to pay for government programs and debt.

Relieving some pressure on Latin American currencies, data showed U.S. private sector hiring surged in December, raising hopes the labor market was improving in the world's largest economy.

"We are seeing markets that aren't ignoring the U.S. economic data but rather watching a situation in Europe that can exacerbate," said Eduardo Avila, an analyst at brokerage Monex in Mexico City.

Elsewhere in Latin America, Colombia's peso gained 0.37 percent to 1,878.90 to the dollar. Peru's sol weakened 0.04 percent to 2.6940.