(Corrects day in paragraph 10 to Tuesday, not Monday)
* France's 10s/30s yield spread widens to highest since Dec
* Germany, Belgium among potential sellers of long-dated
* Euro zone GDP data could put upward pressure on yields
* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr
By Abhinav Ramnarayan
LONDON, May 16 The gap between 10- and 30-year
French government bond yields reached its widest since December
2014 ahead of a 30-year bond sale seen as the first big test of
sentiment since France's presidential election.
France's debt agency has been monitoring the market for a
30-year bond sale via syndication - a system where the borrower
appoints banks to sell bonds directly to investors - and started
marketing the deal on Tuesday.
Although French government bonds have rallied sharply since
it became apparent that centrist Emmanuel Macron would become
president ahead of anti-euro, far-right leader Marine Le Pen,
investors will be keeping a close eye on this sale.
"The appetite for this deal should be good, but we will be
watching it closely because parliamentary elections are coming
up and they will determine whether Macron can form an effective
government," said ING strategist Benjamin Schroeder.
Macron appointed a conservative prime minister on Monday in
a move to broaden his political appeal and weaken his opponents
before parliamentary elections in June.
Tuesday's sale will also demonstrate investor appetite for
duration, particularly with other long-dated bond sales expected
from Germany, euro zone bailout fund EFSF and possibly Belgium.
"The spread between 10- and 30-year has been under
steepening pressure since the middle of last month, which we
think reflects issuance expectation in the sector," Mizuho
strategists said in a note.
Germany is slated to sell 30-year bonds on Wednesday
while Belgium has cancelled a bond auction for next
week. Analysts said that may be because the Belgian debt agency
is planning a 15- or 20-year bond sale this week.
Euro zone bailout fund European Financial Stability Facility
is widely expected to sell long-dated bonds this week, and
Slovenia is selling bonds maturing in 2027 and 2040 on Tuesday.
The gap between France's 10- and 30-year debt rose to 108.1
basis points on Tuesday, the highest level since December 2014.
High-rated euro zone bond yields were flat to a basis point
higher ahead of the release of euro zone economic output numbers
for the first quarter of the year, due at 0900 GMT.
Reuters estimates are for 1.7 percent growth year-on-year, a
figure that could put further upward pressure on yields.
The yield on Germany's 10-year government bond, the
benchmark for the region, up 1 basis point to 0.43 percent.
The lower-rated Southern European bonds outperformed, with
the yield on Spanish, Italian and Portuguese 10-year government
bonds down 1-3 bps.
For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Reporting by Abhinav Ramnarayan; Editing by Hugh Lawson)