* Southern European bond yields down 5-6 bps
* Recover from post-ECB selling as focus switches to stimulus
* Underlying dovish tone of Thursday's ECB meeting supportive
* Risks ahead for Portugal
By Dhara Ranasinghe
LONDON, Dec 9 (Reuters) - Southern Europe led a fall in euro zone borrowing costs on Friday, as the shock of the ECB continuing its stimulus programme at reduced levels next year gave way to relief that its bond-buying would remain in place for some time.
The European Central Bank on Thursday said it would trim its monthly asset purchases to 60 billion euros from 80 billion euros from April, triggering a sell-off in euro zone government bond markets as investors read the move as a tapering of the scheme.
However, as the dust settled bond investors took comfort from the underlying dovish tone from the central bank. The ECB promised protracted stimulus to support the region's fragile economic recovery, while the extension of the scheme until the end of 2017 was three months longer than expected.
"It is clear that even if there is a tapering, and we would call it that, the overall message from the ECB yesterday was dovish," said Jan von Gerich, chief strategist at Nordea.
"They have committed to a programme size that lasts for a longer time period instead of one that keeps the same size for a shorter time."
Italian and Spanish 10-year government bond yields fell 5 basis points (bps) each in early Friday trade, pulling away from the previous day's highs.
Portuguese bond yields fell 4 bps to 3.78 percent , recovering some ground after soaring 24 bps on Thursday in its biggest one-day jump since the day after Britain voted to leave the European Union in June.
Still, analysts said Portuguese bonds remained vulnerable since the ECB's decision not to raise the issuer limit for bond purchases suggested the central bank would continue to struggle to find eligible Portuguese debt for the asset purchase scheme.
According to Societe Generale, buying of Portuguese and Irish bonds has been held at 1 billion euros per month each on the expectation that this will be enough to last until March.
"Now the same pace of buying will have to last until December, with little beneficial relaxation of the constraints," the bank said in a note.
To make further buys possible, the ECB relaxed some of its self imposed rules, increasing the pool of eligible assets.
Bonds with maturity between 1 and 2 years will now be included in the asset buys and the bank will also purchase bonds yielding less than its -0.4 percent deposit rate, if necessary.
German 2-year bond yield, which fell sharply on the changes to the scheme, steadied on Friday to trade at minus 0.74 percent . Germany's 10-year Bund yields were about 3 bps lower at 0.37 percent.
Reuters new 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 (Reporting by Dhara Ranasinghe)