* Bond yields nudge higher, France underperforms
* Televised debate between French presidential candidates
* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr
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, government bond yields edged higher as
a perception that the European Central Bank may be preparing to
scale back its ultra-easy monetary policy dented appetite for
But French bonds underperformed most of their peers.
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 Sunday showed independent centrist
Emmanuel Macron would lead first-round voting with 26.5 percent,
just ahead of far-right leader Marine Le Pen on 26 percent,
before beating her 64-36 in the run-off.
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."
France's 10-year government bond yield rose 2 basis points
to 1.12 percent, not far off multi-month highs hit
And with benchmark 10-year German Bund yields up just 1 bps
at 0.44 percent, the gap between French and German
bond yields widened to about 68 bps -- its widest in almost two
Most other euro zone yields were about 1 bps higher, with
the outlook for ECB monetary policy the other key focus for
ECB policymaker policy maker Ignazio Visco was reported
saying the central bank could step away from its pledge to keep
interest rate 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."
For Reuters Live Markets blog on European and UK stock
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(Reporting by Dhara Ranasinghe; Editing by Andrew Heavens)