* Post-ECB bond rally fizzles out
* French bonds underperform after S&P downgrade
* Trade range-bound before U.S. jobs data (Updates throughout)
By Ana Nicolaci da Costa
LONDON, Nov 8 (Reuters) - Euro zone bonds fell on Friday as a rally driven by the European Central Bank's surprise rate cut fizzled out and France struggled with a downgrade to its credit ratings.
Trade was expected to remain range-bound before October U.S. jobs numbers as investors try to gauge when the Federal Reserve may start scaling back its monetary stimulus and also the impact of a partial government shutdown on the world's largest economy.
Ten-year French bonds underperformed German debt after Standard & Poor's cut France's sovereign rating by one notch to AA, giving a thumbs-down to government efforts to put the euro zone's second largest economy back on track.
Italian and Spanish bonds also fell as investors cashed in on ECB-led gains made in the previous session, but analysts expected Spanish and Italian debt would continue to benefit from the ECB's accommodative stance.
"Yesterday's decision is very supportive for peripheral bonds as now core bonds are even more rich," said Cyril Regnat, fixed income strategist at Natixis.
"We still favour carry trade strategies by buying some Spanish or Italian short bonds in the 1 to 3 year area and financing them in the repo market."
The ECB cut interest rates to a record low on Thursday and said it could take them lower still to prevent the euro zone's recovery from stalling as inflation tumbles.
Ten-year Italian yields rose 3 basis points to 4.13 percent after falling to five-month lows on Thursday.
Equivalent Spanish yields were 2 basis points higher at 4.08 percent.
"It is (U.S.) payrolls day which is the main focus, but after the very dovish ECB tone yesterday, you have to buy any pull-back in Europe," one trader said.
"I really don't think the market has fully taken on board how dovish they were yesterday."
U.S. OUTLOOK
U.S. employers are expected to have added 125,000 new jobs to their payrolls last month, according to a Reuters survey, down from a 148,000 gain in September.
With fourth-quarter growth now expected to be below 2 percent, it is unlikely the Federal Reserve will curtail its bond-buying programme before March of next year, even if October payrolls were to surprise on the upside, economists said.
But Regnat said he expected 130,000 jobs to have been created and that would bring forward tapering bets to January.
Ahead of the widely-watched data release, German Bund futures were steady, down only 4 ticks at 141.79.
French bonds underperformed after the downgrade, with 10-year yields up 1.8 basis points at 2.19 percent.
But the impact was relatively muted, with those yields holding near four-month lows of 2.137 percent hit on Nov 1.
"I don't know if it will have a huge impact, based on when we've had previous downgrades," said the trader.
Regnat expected the yield spread between Belgian and French bonds to narrow as a result of the downgrade but said Dutch bonds stood to benefit the most because they were cheap compared to their safe-haven counterparts. (Editing by Gareth Jones)