LONDON, March 31 (Reuters) - A calmer tone surfaced in euro zone bonds on Thursday, but with inflation and rate-hike fears gripping markets German 10-year bond yields were set to end March with their biggest monthly surge since 1996.

Most 10-year yields across the single currency bloc were down 5-6 basis points in early trade, a day after a fresh surge triggered by strong inflation prints in Germany and Spain.

French inflation rose to a record high 5.1% in March, data on Thursday showed, although falling oil prices brought some comfort to bond investors.

Surging inflation, which has raised expectations the European Central Bank may have to hike interest rates sooner rather than later, and a more aggressive stance from the likes of the U.S. Federal Reserve have sent bond markets reeling.

Germany's 10-year Bund yield, down five basis points (bps) in early trade at 0.60%, is up 45 bps in March and set to end the month with the biggest monthly surge since 1996.

Two-year German yields, trading around 0%, have jumped around 48 bps this month - poised for their biggest monthly rise since 2011.

Dutch and French 10-year bond yields were set for their biggest monthly rises since 2012 and 2011 respectively, with monthly rises over 40 bps each .

"This is very significant," said ING senior rates strategist Antoine Bouvet. "A move of this magnitude will have investors reassess the riskiness of their bonds portfolio and have market participants who thought their rates risk was negligible until now hedge it."

Yield surges in euro area bond markets echoed similar milestones being seen in other major debt markets.

U.S. 2-year Treasury yields are up around 85 bps in March, set for their biggest monthly increase since 1989, according to Refinitiv data. They are up 157 bps this quarter, on track for the biggest quarterly jump since 1984.

Commerzbank bond analysts said investors seemed unwilling "to catch the falling knife" and with inflation headwinds and aggressive monetary policy exit pricing still in vogue, they were sticking with their view that further weakness in German bonds was likely.

(Reporting by Dhara Ranasinghe Editing by Mark Potter)