French yields fall as political jitters ease, world stocks mixed

French 10-year bond yields hit a one-month low on Monday, pushing other euro zone sovereign yields lower, while a more cautious mood hung over world stock markets and the dollar, both of which struggled for clear direction.

The fall in French bond yields came as polls showed centrist Emmanuel Macron would easily beat far-right candidate Marine Le Pen in May's presidential election runoff, relieving some fears that have built up in recent weeks among investors.

Hard-left candidates Benoit Hamon and Jean-Luc Melenchon have said they are discussing cooperation in their bid for the presidency but are seen struggling to find a common platform.

World stocks and the dollar trod water, while U.S. Treasury yields recovered some ground following last week's decline, the steepest weekly fall in months.

In Europe, the French-led fall in bond yields and tightening of spreads over Germany were the most notable moves at the start of a week in which U.S. President Donald Trump's State of the Union address on Tuesday will loom large.

FR10YT=TWEB, outperforming euro zone peers. Safe-haven German bond yields DE10YT=TWEB edged higher, narrowing the gap between French peers to around 70 basis points, its tightest level in just over a week.

Benchmark Spanish, Italian and Portuguese yields all fell between 3 and 5 basis points. ES10YT=TWEB IT10YT=TWEB PT10YT=TWEB

The 10-year U.S. Treasury yield rose 2 basis points to 2.335 percent US10YT=RR. On Friday it hit a five-week low of 2.31 percent, and last week's fall of nearly 11 basis points was the steepest weekly decline since July last year.