* Portugal, Spain, Italy, Ireland yields hit new lows
* Market inflation gauges on course for biggest weekly rise
* U.S. nonfarm payrolls expected to rise by 240,000 - poll
By John Geddie
LONDON, March 6 (Reuters) - The gap between German and U.S. bond yields held near its widest for decades on Friday, before a U.S. jobs report which could harden the case for a nearer-term interest rate hike and with the ECB's money-printing programme just days away.
The spread peaked at 1.79 percent in U.S. trading late on Thursday, according to Reuters data which goes back to 1990.
It opened a shade below on Friday at 1.77 percent, with German 10-year bond yields down 2 basis points (bps)at 0.34 percent and U.S. equivalents flat at 2.11 percent.
"The spread can only widen," KBC strategist Piet Lammens said.
"We are coming closer to when the U.S. Federal Reserve will start its tightening cycle, and in Europe we would have just started quantitative easing (QE)."
In Europe, yields on low-rated debt fell, leading a rally that was ignited by European Central Bank (ECB) chief Mario Draghi's pledge on Thursday to buy government bonds beyond 2016 if necessary to achieve the goal of reflating the economy.
The ECB will begin its QE scheme on Monday. Draghi says the bank is committed to get inflation back on course for its target of just below 2 percent.
In signs that some investors have faith Draghi's scheme will work, market gauges of consumer price growth are on course for their biggest weekly rise since the height of the financial crisis in 2012.
Portuguese 10-year yields fell 12 basis points to a low of 1.7 percent, while Italian and Spanish equivalents fell 5 bps to lows of 1.28 and 1.19 percent , respectively.
Irish equivalents fell 3 bps to a new record low of 0.84 percent, while all other euro zone bonds were about 2-3 bps lower.
But with the ECB in easing mode, the U.S. Federal Reserve is toying with the prospect of raising rates, and that could be firmed up by the U.S. jobs report due out at 1330 GMT.
Economists polled by Reuters expect nonfarm payrolls to rise by 240,000 in February, slightly down from January's 257,000 increase.
Analysts said a significant improvement in the unemployment rate or wage growth could raise the chances that the Fed will hike rates sooner than expected. The Fed's next policy meeting is on March 17-18.
Late on Thursday, San Francisco Fed chief John Williams said U.S. policymakers should not wait too long to raise interest rates, because doing so could mean "drastically" overshooting on inflation and forcing the Fed to hike rates dramatically.
(Editing by Louise Ireland)