Global markets
appeared largely calm on Friday, the last day of trading before the
first round of France's closely fought presidential election, with
French bond yields hitting a three-month low and the euro treading
water.
A fatal
attack on police officers in Paris overnight caused investors some
immediate jitters, with the gap between French and German 10-year
borrowing costs -- a key indicator of election nerves in recent months
-- rising sharply in the first few minutes of trading.
Traders said this was on concern the attack could sway the vote in favor of far-right anti-immigrant candidate Marine Le Pen, whose anti-European Union stance is of concern o many in the markets.
But that move reversed as the session wore on, with the yield on 10-year French government debt hitting its weakest since mid-January and the gap between it and its German equivalent falling to its tightest in three weeks
Although falling yields usually indicate investors seeking safety, in the case of the election uncertainty lower French yields imply a more steady-as-she-goes approach to the future.
Investors seem relatively confident that while Le Pen might well win enough votes on Sunday to make the second round on May 7, she will then be comfortably beaten, probably by the market-friendly, centrist candidate Emmanuel Macron.
Having hit a three-week high close just below $1.08 earlier in the week, the euro was flat at $1.0717 EUR=.
European stocks edged down a touch, with the pan-European STOXX 600 index down 0.1 percent by 0910 GMT.
But options markets EURVOL= suggested investors remain worried about strong results for Le Pen and/or hard-left challenger anti-EU Jean-Luc Melenchon that would point to the risk of another major political shock for Europe in two weeks time.
Traders said this was on concern the attack could sway the vote in favor of far-right anti-immigrant candidate Marine Le Pen, whose anti-European Union stance is of concern o many in the markets.
But that move reversed as the session wore on, with the yield on 10-year French government debt hitting its weakest since mid-January and the gap between it and its German equivalent falling to its tightest in three weeks
Although falling yields usually indicate investors seeking safety, in the case of the election uncertainty lower French yields imply a more steady-as-she-goes approach to the future.
Investors seem relatively confident that while Le Pen might well win enough votes on Sunday to make the second round on May 7, she will then be comfortably beaten, probably by the market-friendly, centrist candidate Emmanuel Macron.
Having hit a three-week high close just below $1.08 earlier in the week, the euro was flat at $1.0717 EUR=.
European stocks edged down a touch, with the pan-European STOXX 600 index down 0.1 percent by 0910 GMT.
But options markets EURVOL= suggested investors remain worried about strong results for Le Pen and/or hard-left challenger anti-EU Jean-Luc Melenchon that would point to the risk of another major political shock for Europe in two weeks time.
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