LONDON, June 12 (Reuters) - French borrowing costs fell on Monday, tightening the gap over benchmark Germany, after projections from the first round of parliamentary elections suggested the president’s party is set to secure a huge majority to push through pro-business reforms.
France’s 10-year government bond yield fell 3 basis points to 0.62 percent, outperforming other higher-rated euro zone peers. The gap over benchmark German Bund yields tightened to around 36 basis points from around 39 bps late on Friday.
Analysts said further signs of fading political uncertainty in France also boosted sentiment towards lower-rated peripheral bond markets, with Italian yields falling to their lowest levels sine January and Portuguse yields tumbling to nine-month lows of around 2.97percent.
Reporting by Dhara Ranasinghe; Editing by Andrew Heavens