* Bund yields set for biggest weekly rise since Nov
* US rate-hike talk, inflation pick up weigh
* Fed chief Janet Yellen speaks later in day
* Fitch Ratings to review France
* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr
By Dhara Ranasinghe
LONDON, March 3 Germany's benchmark 10-year
government bond yield was set for its biggest weekly rise since
November's U.S. election on Friday on growing talk of a March
U.S. rate rise, rising euro zone inflation and an easing of
jitters over elections in France.
Several Federal Reserve officials have made the case this
week for another interest rate rise soon, prompting investors to
ratchet up expectations for a move at the Fed's March 14-15
Fed Chair Janet Yellen is due to speak later on Friday and
could reinforce talk of an imminent rate rise that has sent
two-year Treasury yields this week to their highest levels since
Also, data this week showing euro zone inflation has jumped
above the European Central Bank's target of close to but below 2
percent has reinforced a view that a pick-up in price pressures
and economic growth will make it harder for the ECB to maintain
the ultra-loose monetary policy that has long supported bond
prices. When a bond's price rises, its yield falls.
German 10-year Bund yields, steady at 0.31 percent
on Friday, were set to end the week 12 basis
That would mark the biggest weekly rise since the week
Donald Trump was elected as U.S. president and bond yields rose
sharply as investors bet that large fiscal stimulus under a new
administration would boost inflation.
Inflation erodes the value of fixed income assets, forcing
yields higher as compensation.
"Reflation bets have returned to the bond market and at the
same time political jitters have eased," said Martin van Vliet,
senior rates strategist at ING.
The popularity of far-right, euro sceptic French
presidential candidate Marine Le Pen has rattled investors this
year and battered France's government bond market.
But sentiment towards French bonds has improved this week
amid further signs that independent centrist candidate Emmanuel
Macron is strengthening his position as the frontrunner to win a
May runoff to be France's next president.
The yield on Germany's two-year bonds, which
have benefited from French election jitters, has pulled back
from record lows hit last week and was poised to close the week
10 bps higher -- the biggest weekly rise since December 2015.
The spread between French and German 10-year bond yields
meanwhile held close to one-month lows hit on
Thursday just below 60 bps.
Fitch Ratings is due to review France's sovereign rating
later in the day. It currently gives France an AA rating with a
For Reuters Live Markets blog on European and UK stock
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(Reporting by Dhara Ranasinghe; editing by Richard Lough)