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* France among beneficiaries; Portugal left behind
* Corporate debt buying causing "distortions": BofA-ML (Writes through)
By Francesco Canepa
FRANKFURT, March 6 (Reuters) - The European Central Bank slowed its purchases of Portuguese government debt to a new low in February, just as the nation's borrowing costs hit a three-year high on the debt market.
By contrast, the ECB bought disproportionately more debt last month from bigger economies Germany, France and Italy. French government bond yields have risen due to worries about the ascent of a eurosceptic candidate in the campaign for May's presidential elections.
Euro zone central banks are buying 80 billion euros ($85 billion) worth of mostly sovereign debt every month, pumping money into the economy to revive euro zone inflation.
But they are already starting to run again constraints in small economies such as such as Estonia and Finland, and in countries such as Portugal where the ECB had already bought debt during the financial crisis.
The ECB bought just 656 million euros worth of Portuguese bonds last month, or a third of what its rules dictate, to avoid nearing a self-imposed bar on it owning more than a third of any country's debt.
While the pace of buying will be cut by a quarter from next month, some worry this limit will make it hard for the ECB to extend its quantitative easing (QE) scheme beyond December or help a country in distress via its Outright Monetary Transactions (OMT).
"This could not only restrain the scope for further QE extensions in 2018, but might entail ramifications for the OMT scheme," analysts at Allianz Global Investors wrote.
"Therefore, the ECB will possibly further reduce the pace of purchases for smaller countries such as Portugal and Finland."
The ECB is expected to keep its policy on hold on Thursday despite rising inflation and signs of shortage on the debt market.
The Frankfurt-based central bank slightly slowed its purchases of company bonds last month, just as worries grew that it was helping to fuel a bubble in parts of that market.
The ECB bought 7.8 billion euros worth of corporate debt in February, the lowest figure since last summer if December, when the ECB's money-printing programme was suspended during the Christmas break, is taken out.
The ECB has bought nearly 70 billion euros worth of corporate bonds since June, much more than many in the market were expecting.
This has pushed the yields on debt issued by some highly-rated companies such as German conglomerate Siemens below that of a highly-rated government bond.
"In periods of euro zone political uncertainty, the onus falls on the ECB to continue with policies such as QE to stem euro zone 'fragmentation' risks," analysts at investment bank BofA-ML said.
"And yet, policy uncertainty and central bank intervention have precisely acted as a powerful cocktail lately, creating further distortions in the euro credit market." ($1 = 0.9447 euros) (Reporting by Francesco Canepa; Editing by Ruth Pitchford)