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UPDATE 1-Euro zone bond yields rise as risk appetite picks up

* Bund yield touches 1-week high

* Syria worries fade for now but geopolitics in focus

* Moody's to review Spain, upgrade seen by analysts

* Euro zone periphery govt bond yields http://tmsnrt.rs/2ii2Bqr (Updates price action)

LONDON, April 13 (Reuters) - Borrowing costs in the euro area nudged higher on Friday as geopolitical and world trade worries eased, leaving Germany's benchmark 10-year government bond yield on track for its biggest weekly rise in over two months.

U.S. President Donald Trump on Thursday cast doubt over the timing of a threatened strike on Syria in response to a poison gas attack, lifting risk appetite in world markets and in turn denting demand for safe-haven U.S. and euro zone debt.

A surprise offer by Trump to rejoin the Trans-Pacific Partnership also eased concerns about global trade tensions. World stock markets were set to post their biggest weekly gain in over a month as investors seemed to shrug off the uncertainty over tension in the Middle East and the prospect of a global trade war.

Still, some caution heading into the weekend was likely to limit any rise in government bond yields, analysts said.

Most 10-year bond yields in the single-currency bloc were just 0.5 to 1 basis points higher on the day.

"In the past 24 hours, geopolitical risks have eased but uncertainty over the weekend is looming and today's economic calendar is thin, so it would be safer to err on side of caution," said KBC rates strategist Mathias van der Jeugt.

In Germany - the euro zone's benchmark issuer - 10-year bond yields briefly touched a one-week high at 0.537 percent .

They were set to end the week up around 2.5 bps, the biggest weekly rise since early February.

There was some focus on Spain ahead of a Moody's ratings review later in the day.

Spain, one of the strongest-performing euro zone bond markets so far this year, has seen its ratings lifted to single A territory by Fitch and S&P Global in recent months thanks to stronger economic and fiscal conditions.

Moody's rates Spain at Baa2, two notches below the Fitch and S&P ratings for Spain, making an upgrade on Friday a possibility, analysts said.

"Any upgrade from Moody's would be basically catching up to the other big two," said ING senior rates strategist Martin van Vliet. "Nonetheless, its an interesting event tonight."

The gap between Spanish and German 10-year bond yields was at around 74 basis points on Friday, having hit 64 bps last week which was the tightest gap since 2010.

(Reporting by Dhara Ranasinghe Editing by Hugh Lawson)