* Abe's big election win lifts stocks, weakens yen
* Cements expectation of Japan's ultra-easy monetary policy
* ECB to meet on Thursday, map out future of QE
* Euro zone periphery govt bond yields http://tmsnrt.rs/2ii2Bqr
LONDON, Oct 23 (Reuters) - Euro zone borrowing costs fell on Monday as a big win for Japanese Prime Minister Shinzo Abe's ruling bloc in a national election gave the green light for a continuation of Japan's hyper-easy monetary policy.
It's a reassuring sign for world bond markets as they brace for the European Central Bank to this week signal that it will take baby steps away from an ultra-easy monetary policy stance that has long underpinned bond yields.
The ECB on Thursday is expected to announce a cut in its monthly bond purchases, twinned with a lengthy extension of stimulus and a commitment to keep rates low for many years to come.
Sunday's election results in Japan have comforted investors that monetary policy in the world's third biggest economy will remain in ultra-easy mode for some time.
"There was bit of a tail risk that if Abe emerged from the election weaker, there would be a weaker mandate for QE (quantitative easing) in Japan," said Peter Chatwell, head of euro rates strategy at Mizuho.
"Now there's a renewed mandate for QE, which means a weaker yen and stronger JGB prices. It also has a significant spillover for other developed markets."
Japanese government bond (JGB) yield erased an early rise as Abe's election win reinforced a view his reflationist economic policies will remain in place.
The yield on the 10-year JGB initially rose to 0.080 percent, matching a 10-week high hit earlier this month, but it slipped back to 0.070 percent, flat on the day.
That set the tone for trade in European bond markets, with most 10-year bond yields down 1-2 basis points.
In Germany -- the euro zone's benchmark bond issuer -- 10-year bond yields fell 2 bps to 0.43 percent, pulling back from roughly one-week highs at 0.46 percent.
There was a slight underperformance by Spanish bonds after Madrid at the weekend said it would take the unprecedented step of firing the Catalonia government, in a last bid to thwart the region's push for independence and to calm fears of turmoil in the euro zone's fourth biggest economy.
Two wealthy regions of northern Italy meanwhile voted overwhelmingly on Sunday for greater autonomy in referendums that could further fan regional tensions in Europe.
The premium investors demand for holding Spanish 10-year bonds over top-rated German peers was at 123 bps, compared with around 121 bps on Friday.
For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.bi z / c m s / ? p a g e I d = l i v e m a r k e t s
(Reporting by Dhara Ranasinghe; editing by John Stonestreet)