* Bond yields nudge up, France trading nervous
* Televised debate between French presidential candidates
* Portugal outperforms market after S&P Global affirms
* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr
(Adds Portugal move, updates prices)
By Dhara Ranasinghe
LONDON, March 20 The premium that investors
demand to hold French instead of German debt rose to its highest
in almost two weeks on Monday, reflecting unease among investors
before the first televised debate in France's turbulent
Across the euro zone, high-rated government bond yields
edged up as a perception that the European Central Bank may be
preparing to scale back its ultra-easy monetary policy dented
appetite for fixed income.
But trading around French bonds was particularly nervy, and
the spread over German equivalents hit 68 basis points at one
stage, its widest in almost two weeks.
French voters go the polls on April 23 and May 7 in the
two-round election, which is being closely followed outside
France as another test of popular discontent with traditional
parties and institutions such as the European Union.
A poll released on Monday showed far-right leader Marine Le
Pen would lead first round voting with 27 percent, ahead of
independent centrist Emmanuel Macron on 23 percent. Macron was
seen beating Len Pen in the run-off vote.
Monday's televised debate is also seen as an opportunity for
scandal-hit conservative candidate Francois Fillon to get back
"A tired cliché is to say that such debates only confirm
voters' intention rather than convince them to shift from one
candidate to another," said Mizuho rates strategist Antoine
"We think the importance of this debate should not be
underestimated. Only 60 percent of voters polled by Ifop say
they have made up their mind."
At one stage France's 10-year government bond yield rose 4
basis points to 1.14 percent, within sight of
multi-month highs hit in February, though it settled at 1.10
percent towards the close.
Most other euro zone yields edged higher, with the outlook
for ECB monetary policy the other key focus for investors.
ECB policymaker Ignazio Visco was reported saying the
central bank could step away from its pledge to keep interest
rates low after ending quantitative easing.
Comments from the ECB's Ewald Nowotny suggesting rates could
rise before the end of bond-buying stimulus triggered a sharp
sell-off at the end of last week.
"We haven't see a consistent message from ECB Governing
Council members on this," said DZ Bank strategist Andy Cossor.
"So we are waiting for more speeches from ECB heavyweights to
see how the thinking is developing."
Portugal and Spain bucked the general trend though, with
Portugal's 10-year borrowing costs dropping as much as 6 basis
points to 3.96 percent.
The fall in yield comes after ratings agency S&P Global
affirmed the country's rating late on Friday.
Elsewhere, Slovakia and Belgium sold bonds on Monday, while
euro zone finance ministers were meeting in Brussels to wrap up
a bailout review on Greece.
For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Editing by Catherine Evans and Pritha Sarkar)