* German yields hold above one-month lows
* 10 pct oil price rise boosts inflation outlook
* France’s Macron clashes with Le Pen in presidential debate
* Polls show Macron has most convincing programme
* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr (Updates prices)
By John Geddie
LONDON, April 5 (Reuters) - A surge in oil prices and an easing of concerns over France’s upcoming presidential election appeared to put the brakes on a fall in euro zone government bond yields on Wednesday.
Germany’s 10-year bond yield - the bloc’s benchmark - has halved over the last three weeks as investors reassessed fiscal stimulus from the United States and the time scale for the withdrawal of monetary easing in the single currency area.
But a near 10 percent rise in the price of oil over the last two weeks, and the inflationary impact that will bring, has started to make money managers reconsider the outright level of yields.
One of the justifications for these levels is the political risk posed by the two-stage French presidential election where far right eurosceptic leader Marine Le Pen is one of the leading contenders. The decisive run-off vote will be held on May 7.
Le Pen’s chances, though, were seen as diminishing after a TV debate on Tuesday where a snap poll showed her to be the fourth most convincing candidate, trailing Jean-Luc Melenchon, Emmanuel Macron and Francois Fillon.
“The rally has been strong in recent days and an interruption in this trend should be expected,” ING senior rates strategist Martin van Vliet said. “With the TV debate in France not showing a surprisingly strong showing for Le Pen, the flight to safety theme is weakening.”
In a further sign that investor demand for safe haven German bonds was waning, bids at an auction of five-year paper on Wednesday came up short of the amount of offer in what is known as a “technical failure”.
In secondary markets, German 10-year yields rose 1 basis point to 0.26 percent, off a one-month low of 0.24 percent breached Tuesday but still far from a 14-month high of 0.51 percent seen in the middle of last month.
Most other euro zone yields were flat or slightly higher on the day.
The gap between French and German bond yields was a fraction tighter after the presidential debate in which leading candidate Macron clashed sharply with Le Pen over Europe.
While polls indicated Macron lost out to the far-left’s Melenchon as the most convincing performer in the debate, his programme for office was seen as the most credible of all the candidates.
With political fears easing, investor attention switched to oil, which hit a one-month high near $55 a barrel as declining U.S. crude inventories and an outage at the largest UK North Sea oilfield were seen to be clearing a glut.
The oil rise is expected to feed through into future inflation gauges closely watched by policymakers in the European Central Bank, some of whom are arguing that economic conditions warrant the withdrawal of its bond-buying scheme.
One of those measures - the five-year, five-year forward breakeven rate - climbed to 1.597 percent on Wednesday, away from a near five-month low of 1.564 percent seen last week.
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Editing by Andrew Bolton