* Low-rated bond yields rise slightly
* Tapering of ECB's bond-buying begins Monday
* Euro area inflation data due at 1000GMT
* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr
By John Geddie
LONDON, March 31 There were tentative signs that
the euro zone's weakest members would be hit the hardest by an
imminent scaling back of the European Central Bank's asset
purchase programme in debt markets on Friday.
The yield, an indication of borrowing costs, on bonds of
southern euro zone states including Portugal and Italy nudged
higher in the final day of trading before the ECB drops its
monthly purchases of debt from 80 billion to 60 billion euros.
These weaker so-called peripheral states are seen as most
dependent on the trillions of euros the ECB has spent over the
last few years to shore up growth and inflation.
And as a tentative recovery gathers steam, some
policymakers, including Dutch central bank head Klaas Knot, are
calling for speedier so-called tapering of the scheme set to run
until at least December.
"The unwinding generally is a risk-off event and for a lot
of peripheral countries it doesn't take a lot in terms of higher
financing costs for their debt stock to look problematic,"
Rabobank strategist Lyn Graham-Taylor said.
With the first scaling back of the ECB's government
bond-buying scheme that began in early 2015 taking effect on
Monday, investors have become increasingly nervous about how
quickly policymakers might withdraw monetary stimulus.
It also comes at a time when the world's biggest economy,
the United States, is tightening monetary conditions. New York
Fed President William Dudley called on Thursday called for more
rate hikes and an eventual trimming of its bond portfolio.
But Reuters revealed this week that ECB officials are wary
of making any new change to their policy message at their April
meeting after small tweaks to their forward guidance this month
That view was reinforced by weaker-than-expected German
inflation data on Thursday and comments from various ECB
policymakers including chief economist Peter Praet who said he
is still not convinced a recent inflation rise will be durable.
Euro wide inflation data is due at 1000GMT, with economists
polled by Reuters expecting an annualised growth of 1.8 percent
In the last two weeks alone, Germany's 10-year yield - the
bloc's benchmark - has swung from 14-month highs of 0.51 percent
to one-month lows of 0.32 percent hit on Thursday.
On Friday, it was unchanged at 0.33 percent outperforming
Yields on Italy and Portugal's 10-year yield climbed 2 basis
points to 2.32 percent and 3.97 percent
respectively, climbing off two-week and one-month
lows hit on Thursday.
Weak consumer spending data also hit French bonds, adding to
investor nerves about an upcoming presidential election where
one of the leading candidates is far-right, eurosceptic Marine
French 10-year bond yields rose 2 basis points to 0.96
percent, coming off a near one-month low hit
The euro held near two-week lows against the U.S. dollar
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 Andrew Heavens)