LONDON (Reuters) -French government bond yields jumped to their highest since March, and the premium investors require to hold French debt rather than German bonds widened sharply after Prime Minister Francois Bayrou announced a confidence vote in his own government.
Bayrou’s minority government could be ousted next month after three main opposition parties said they would not back him in a vote he called over his plans for sweeping budget cuts.
France’s 10-year bond yield rose as much as 9 basis points in thin after-hours trading to 3.508%, its highest since March.
The gap between French and German 10-year yields, the premium investors require to hold French debt over German, widened nearly 7 bps, to its highest since April.
That would be the largest one-day widening in the German French spread since June last year ahead of legislative elections that produced the current hung parliament.
(Reporting by Alun JohnEditing by Tomasz Janowski)
