* Peripheral seen vulnerable to more selling * Not much expected from meeting of euro zone finmins * Quiet start to the week as Asia closed for holidays By Ana Nicolaci da Costa LONDON, Feb 11 (Reuters) - Spanish and Italian bond yields rose slightly on Monday, with a sell-off in lower-rated debt expected to continue due to political uncertainty in Spain and jitters ahead of an Italian election this month. Analysts were not expecting much news from a euro zone finance ministers meeting at which the strength of the euro could be discussed before a G20 meeting at the end of the week. A peripheral bond rally paused last week as Spanish Prime Minister Mariano Rajoy faced calls to step down over corruption allegations and a scandal involving Italian bank Monte dei Paschi fuelled political uncertainty before elections there. As long as these issues remained unresolved, investors may favour Bunds over lower-rated debt, analysts said. "Near term, I think (the periphery) can continue to underperform because the situation in these countries remains relatively unclear," said Patrick Jacq, rate strategist at BNP Paribas. "Whether it's in Spain or in Italy, we have some political issues and in the near term, this (will) continue to (weigh) on these markets." Ten-year Spanish government bond yields were up 4.8 basis points at 5.43 percent, having risen about 48 basis points since late January. Equivalent Italian borrowing costs were up 1.7 bps at 4.59 percent, having climbed 45 bps over the same period. "(The sell-off) can continue a little bit because we are still not pricing in correctly, or to the full extent, the Italian political risk," Citigroup strategist Alessandro Tentori said. There was a small chance that the formation of a coalition government could temporarily hinder policy-making or that parties would fail to agree a coalition, which would prompt new elections, he added. The centre-left is on course to win Italy's Feb 24-25 vote despite a remarkable surge by former premier Silvio Berlusconi, final polls showed on Friday but it is likely to have to form a coalition with technocrat outgoing Prime Minister Mario Monti. QUIET SESSION Trade was thin with most Asian bourses closed for the Lunar New Year holiday, including those in China, Hong Kong, Singapore and South Korea, and Japan also closed for a public holiday. German Bund futures were 10 ticks lower at 142.73, with traders saying the contract had met technical resistance at 143.11 - the day's high. Analysts were also more favorable on German Bunds than other higher-rated government bond markets. "We still like to be underweight France versus Germany, so we think France has the potential to widen a bit further," Tentori said. "It's a matter of investor positioning - so everybody is long, it's a matter of France being a strong net issuer, net supplier of bonds for the next two months and it's a matter of also of the fundamentals not having picked-up." The 10-year yield spread between French and German bonds was at 63 bps, unchanged from the previous trading session. With no major economic data this session investors would look to euro zone industrial production numbers on Wednesday and gross domestic product figures on Thursday for the latest gauge of the struggling economy. Attention will also be on Thursday's Italian bond sale, which will see the offering at a regular auction of a 30-year BTP for the first time since May 2011. The nervous backdrop is likely to force Italy to pay more in order to get the bonds away, but analysts expect the sale of three separate bonds including those maturing in 2015 and 2026 to benefit from heavy redemption flows in February. "We are quite optimistic that they will make it, there will be no negative surprise," Piet Lammens, strategist at KBC said. "Ahead of the Italian elections, there is a bit of a risk but we think Italian banks will be there to get enough bonds placed in the market."