LONDON, April 11 (Reuters) - Japanese bank Nomura said on Tuesday it would enter an "outright short" position to bet against French government bonds if far-left candidate Jean-Luc Melenchon were to face the far-right Marine Le Pen in France's presidential run-off next month.
"If Jean-Luc Melenchon were to face Marine Le Pen, we would enter an outright short OAT (French government bond position)," Nomura strategist Jordan Rochester wrote in a note to clients.
"In contrast, if Le Pen does not make it to the second round, we think demand for OATs will pick up again as the market fades a 'euro break-up story' and re-focuses on ECB (European Central Bank) normalisation."
A slew of opinion polls have shown Melenchon - who, like Le Pen, wants a referendum on EU membership - surging in recent days, with an Ifop survey on Tuesday putting him in third place ahead of the conservative Francois Fillon.
Japanese investors dumped a record amount of French bonds in February, data from Japan's Ministry of Finance showed on Monday. (Reporting by John Geddie; Editing by Jemima Kelly)