(Corrects 7th paragraph to show French candidates failed to
reach an alliance)
* French election jitters ease, yields at one-month low
* Two polls show Macron easily beating Le Pen in runoff
* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr
By Dhara Ranasinghe
LONDON, Feb 27 French 10-year bond yields fell
to a one-month low on Monday, tightening the gap against German
peers, as latest polls showed centrist candidate Emmanuel Macron
would easily beat the far-right's Marine Le Pen in May's
presidential election runoff.
Unease at Le Pen's strong showing in France's presidential
race has hurt French government bonds in recent weeks, with her
anti-euro stance unnerving investors, but developments in recent
days have calmed some of those jitters.
A poll released on Sunday by Odoxa/Dentsu-Consulting showed
Macron, a former economy minister running without the support of
any traditional political party, would beat Le Pen in the runoff
with 61 percent of the vote, versus 39 percent for her.
Another poll by Figaro/LCI showed Macron winning the runoff
by 58 percent to 42 percent for Le Pen.
The election is held in two stages and Le Pen is expected to
lead in the first round of voting in April.
The pollsters said Macron had been boosted by last week's
alliance with centrist Francois Bayrou, which has enabled him to
move ahead of conservative candidate Francois Fillon.
Concerns about Le Pen gaining ground were also eased after
French Socialist presidential candidate Benoit Hamon and
hard-left candidate Jean-Luc Melenchon inidcated on Sunday that
they have failed to agree on a possible alliance in the upcoming
"Macron gained further support in the polls," said DZ Bank
rates strategist Rene Albrecht. "Another important point is that
it looks like Hamon and Melenchon won't merge, so there is less
of a chance that we will have a left-wing candidate that could
outpace Macron or Fillon."
France's 10-year bond yield fell 2.5 basis points to a
one-month low of 0.90 percent, outperforming euro
Safe-haven German bond yields edged higher,
narrowing the gap between French peers to around 70 basis
points, its tightest level in just over a week. Fears about the
French election had pushed the yield gap to around 84 bps last
week - the highest since late 2012.
News late on Friday that the Netherlands' future
relationship with the euro will be comprehensively debated by
its parliament following an election in March had little
immediate market impact.
With the exception of France, most euro zone bond yields
were little changed.
Analysts said there was some caution ahead of a speech by
U.S. President Donald Trump to a joint session of Congress on
Tuesday, in which he is expected to unveil some elements of his
plans to cut taxes.
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 Catherine Evans)