* Juppe rules out candidacy in French presidential election
* North Korea's missile test underpins safe-haven yen
* Yellen's remarks cement rate-hike expectations
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Ritvik Carvalho
LONDON, March 6 The euro fell on Monday after
former French prime minister Alain Juppe ruled out standing in
the country's presidential elections, which investors saw as
increasing the likelihood of a victory by anti-EU leader Marine
A poll on Friday had suggested that if Juppe replaced the
scandal-hit Francois Fillon as the centre-right candidate, he
would win the election's first round, with centrist candidate
Emmanuel Macron coming second - a scenario that would knock Le
Pen out of the race.
But with Fillon in contention, polls suggest Le Pen would
come either first or second in the first round and would then
face Macron in the final run-off. Although polling suggests the
far-right leader would lose to Macron or even to Fillon,
investors are mindful of surprise vote outcomes.
The news sent the euro 0.4 percent lower to $1.0577,
down from a two-week high it touched earlier in the day.
French government bond yields edged up on the news, with the
gap between 10-year French yields and their German equivalents
widening to almost 64 basis points,
off a one-month low hit on Friday just below 58 bps.
"Everybody fears (a Le Pen victory) could have a tremendous
impact on the common currency, as she's indicated that she
wishes to exit from the euro," said Commerzbank currency
strategist Esther Reichelt, in Frankfurt.
A source told Reuters on Monday that allies of former French
president Nicolas Sarkozy are asking fellow Republican Fillon to
find a replacement candidate.
News earlier in the day of North Korea firing four ballistic
missiles, saw investors buy into the yen, with the dollar
0.3 percent lower at 113.80 yen, down from Friday's
two-week high of 114.75.
"Markets are quite risk-negative this morning," said Adam
Cole, global head of FX strategy at RBC Capital Markets in
After retreating to a one-week low in early European
trading, the dollar recovered against a basket of major
currencies, up 0.1 percent at 101.60 by 1235 GMT.
Federal Reserve Chair Janet Yellen on Friday said the U.S.
central bank was set to lift its benchmark interest rate this
month, provided jobs and inflation data hold up, which markets
saw as cementing a hike at the bank's next meeting.
Fed funds futures pricing shows traders see around an 80
percent chance of a rate increase this month, up from just a
one-in-three chance early last week, according to CME Group's
Fed Watch tool.
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 Ed Osmond)