* Low-rated bonds of Portugal and Italy underperform
* Tapering of ECB's bond-buying begins Monday
* Euro zone inflation falls below expectations
* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr (Updates prices to close)
By John Geddie
LONDON, March 31 (Reuters) - Euro zone debt markets on Friday offered a glimpse of what life could be like for the bloc's weaker economies when the central bank starts to withdraw its monetary stimulus scheme next week.
The yield, an indication of borrowing costs, on bonds of southern euro zone states including Portugal, Italy and Spain pushed higher in the final day of trading before the European Central Bank drops its monthly bond purchases 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 "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.
Rabobank estimates that the gap between Italian and benchmark German bond yields, already around the widest in three years, could stretch by another 85 basis points as the ECB withdraws stimulus.
The first step of that is the scaling back of its government bond-buying scheme, which takes effect on Monday, and investors have become increasingly nervous about how quickly policymakers might tighten policy thereafter.
Some officials have argued that the ECB could raise rates before it ends asset buys, a move that would be counter to its current guidance, but others have dismissed such a discussion.
The ECB's tapering comes as the United States is tightening monetary conditions. New York Fed President William Dudley called on Thursday for more rate hikes and an eventual trimming of its bond portfolio.
While benchmark German bonds yields were little changed on Friday, low-rated bond yields rose. Portuguese, Italian and Spanish 10-year yields climbed 2-4 basis points to 4.00 percent , 2.33 percent and 1.66 percent respectively, drifting from multi-week lows on Thursday.
"The next two months will be more threatening for longs as U.S. data improves, political risk in Europe ebbs, and investors refocus on progressive central bank exits from easy money," Societe Generale strategist Ciaran O'Hagan said.
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 unsettled markets.
That view was reinforced by weaker-than-expected euro zone inflation data on Friday and comments from Executive Board member Benoit Coeure that the ECB's policy guidance remains valid for now but could change if inflation fundamentals warrant.
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 on Thursday.
Markets further trimmed expectations for ECB rate rises on Friday, while a long-term gauge of euro zone inflation expectations fell to its lowest since late November .
Weak consumer spending data also rattled French bonds on Friday, adding to investor nerves about the coming presidential election, in which one of the leading candidates is far-right eurosceptic Marine Le Pen.
French 10-year bond yields rose 3 basis points to 0.97 percent, coming off Thursday's near one-month low.
The euro edged up against the U.S. dollar but was within sight of a two-week low.
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Editing by Andrew Roche