How to implement a pythonic equivalent of tail -F?

What is the pythonic way of watching the tail end of a growing file for the occurrence of certain keywords?

In shell I might say:

tail -f "$file" | grep "$string" | while read hit; do
    #stuff
done

Well, the simplest way would be to constantly read from the file, check what's new and test for hits.

import time

def watch(fn, words):
    fp = open(fn, 'r')
    while True:
        new = fp.readline()
        # Once all lines are read this just returns ''
        # until the file changes and a new line appears

        if new:
            for word in words:
                if word in new:
                    yield (word, new)
        else:
            time.sleep(0.5)

fn = 'test.py'
words = ['word']
for hit_word, hit_sentence in watch(fn, words):
    print "Found %r in line: %r" % (hit_word, hit_sentence)

This solution with readline works if you know your data will appear in lines.

If the data is some sort of stream you need a buffer, larger than the largest word you're looking for, and fill it first. It gets a bit more complicated that way...