* Yields on German and other core bonds up 1-2 bps
* France's 10-year yield spread over Germany falls 3 bps
* South European bonds rally as TLTRO cash flood looms
* Euro zone periphery govt bond yields http://tmsnrt.rs/2ii2Bqr (Updates prices for close)
By Abhinav Ramnarayan
LONDON, March 21 (Reuters) - Investors sold the lowest-risk euro zone government bonds on Tuesday, pushing yields higher, after a strong showing by centrist French presidential candidate Emmanuel Macron in a televised debate on Monday night.
Concerns over the upcoming election have kept high-grade bond yields compressed as investors sought out perceived safe assets on worries that far-right leader Marine Le Pen would win and attempt to take France out of the euro zone.
Any lessening of those concerns puts the focus back on the prospect of tightening monetary policy, with the European Central Bank set to scale down asset purchases in April.
"If you look at the last few weeks, unless there has been negative economic releases on any given day, the general sentiment has been that yields should be moving higher, so whenever the market gets risk-on we see it moving in that direction," said John Taylor, a portfolio manager for AllianceBernstein.
"In addition, we have pretty high inflation numbers in the UK today that likely support this move."
British inflation rose to an annual 2.3 percent in February, exceeding the Bank of England's 2.0 percent target.
The yield on 10-year German government bonds rose 2 basis points to 0.46 percent, and most other high-rated euro zone government bond yields were up 1 to 2 bps.
With yields on French bonds slightly lower on the day, the gap to German equivalents narrowed to 3 basis points.
"There were some doubts whether Macron would perform well because of his relative inexperience, but the poll after the debate shows him in the lead," said DZ Bank analyst Rene Albrecht.
A Harris Interactive poll on Tuesday said Macron had been the most convincing candidate in the debate, adding weight to two other polls that reached a similar conclusion.
Southern European bond yields also fell, with the 10-year borrowing costs of Spain, Italy and Portugal all down 3 to 5 bps.
Those lower-rated countries are considered the most vulnerable to the risk of a break-up of the euro zone, and therefore tend to perform in line with sentiment around the single currency bloc, said Albrecht of DZ Bank.
In addition, the European Central Bank's ongoing targeted long-term refinancing operations (TLTRO) - under which it lends money to euro zone banks at extremely attractive levels - may have also had an effect.
South European banks, which normally have much higher funding costs than northern peers, tend to make use of the TLTRO programme to borrow money and that allows them to buy more of government bonds.
"We have TLTRO coming and so we are seeing some buying at the front end in Spanish and Italian bonds and that is supporting 10-year spreads a little," said Taylor at AllianceBernstein.
ING rates strategists expect a take-up of around 75 billion to 100 billion euros in Thursday's operation, with risk skewed to a larger take-up as more banks lock in four-year funding costs at minus 40 basis points.
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 Larry King and Ed Osmond)