* German yields hold above one-month lows
* 10 pct oil price rise boosts inflation outlook
* France's Macron clashes with Le Pen in presidential debate
* Polls show Macron has most convincing programme
* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr
By John Geddie
LONDON, April 5 A surge in oil prices and easing
concerns over France's upcoming presidential election appeared
to put the brakes on a fall in euro zone government bond yields
Germany's 10-year bond yield -- the bloc's benchmark -- has
halved over the last three weeks as investors reassessed fiscal
stimulus from the United States and the time scale for the
withdrawal of monetary easing in the single currency area.
But a near 10 percent rise in the price of oil over the last
fortnight, and the inflationary impact that will bring, has
started to make money managers reconsider the outright level of
One of the justifications for these levels is the political
risk presented by next month's French presidential election,
where eurosceptic Marine Le Pen is one of the leading
Her chances though were seen diminishing after a TV debate
on Tuesday where a snap poll showed her as the
fourth-most-convincing candidate, trailing Jean-Luc Melenchon,
Emmanuel Macron and Francois Fillon.
"The rally has been strong in recent days and an
interruption in this trend should be expected," ING's senior
rates strategist Martin van Vliet said.
"With the TV debate in France not showing a surprisingly
strong showing for Le Pen, the flight to safety theme is
Analysts said the sale of four billion euros of five-year
bonds from Germany on Wednesday and caution ahead of the release
of minutes from the U.S. Federal Reserve's latest meeting was
also keeping yields in a holding pattern. Investors tend to sell
existing bonds in their portfolio to make room for new supply.
German 10-year bond yields rose 1 basis point to 0.26
percent on Wednesday, off a one-month low of 0.24
percent breached Tuesday but still well off a 14-month high of
0.51 percent seen in the middle of last month.
Most other euro zone yields were flat or slightly higher on
The gap between French and German bond yields was a fraction
tighter after the presidential debate in which leading candidate
Macron clashed sharply with Le Pen over Europe.
While polls showed Macron lost out to the far-left's
Melenchon as the most convincing performer in the debate, his
plan for office was seen as the most credible of all the
With political fears easing, investor attention switched to
oil which climbed near one-month highs on signs of a gradual
tightening in global oil inventories and concerns about a supply
outage at a field in Britain's North Sea.
The oil rise is expected to feed through into future
inflation gauges closely watched by policymakers in the European
Central Bank, some of whom are arguing that economic conditions
warrant the withdrawal of its bond-buying scheme.
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