February 8, 2017 / 8:19 AM / 6 months ago

France, Italy bond yield spreads over Germany hit fresh multi-year highs

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LONDON, Feb 8 (Reuters) - Italian and French 10-year government bond yield spreads over Germany hit fresh multi-year highs on Wednesday as investors continued to fret about political risks in Europe.

The gap between France's 10-year government bond yield and the German 10-year bond yield - the benchmark for the region - rose to 78.8 basis points, the highest since November 2012.

The yield on Italy's 10-year government bond, meanwhile, rose to 201.8 basis points over Germany, higher than any closing price since February 2014.

"The ongoing elevated political headline risk is governing much of the spread tone in widening (French) OAT-Bund spreads," Citi analysts said in a note. "With the French Presidential first round elections still over two months away, ongoing headline risks are likely to continue to weigh on the broader tone."

Reporting by Abhinav Ramnarayan; Editing by Jamie McGeever

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