Euro zone bond yields tick up, French-German spread narrows after bond auction
Updates at 1010 GMT after French bond auction
By Alun John and Yoruk Bahceli
LONDON/AMSTERDAM, June 20 (Reuters) -Euro zone government bond yields rose on Thursday though the market got through a French bond auction largely unscathed, as investors digested a string of central bank meetings on the edge of the bloc, including in Britain.
Markets have been calmer in recent days after being spooked last week by Marine Le Pen's eurosceptic National Rally's lead in opinion polls following President Emmanuel Macron's surprise decision to call a snap parliamentary vote.
The gap between Germany and French yields widened to a seven-year high of 80 bps at the end of the week.
That gap was last 72.7 bps and narrowed slightly after a French government bond auction, which had been high on investors' watchlist as it was the country's first bond sale since the election was called. DE10FR10=RR
Demand for most of the bonds auctioned were lower than their previous reopenings, but France raised a total of 10.495 bln euros.
That was the top amount of the 8 to 10.5 billion euros it aimed to raise, although it targeted a smaller-than usual size for the auctions.
"The market is relieved," said Commerzbank's head of interest rates strategy Michael Leister, noting that France's spread to Germany tightened before and after the auction, and the country raised the top amount it was targeting.
"It further allows the market to stabilize, which is the important point."
France's 10 year yield was nearly 2 basis points higher at 3.17%. FR10YT=RR
Germany's 10-year bond yield DE10YT=RR, the benchmark for the euro zone, rose 3.6 basis points to 2.44%.
The euro zone benchmark yield hit a two month low of 2.34% last week, as German bunds benefited from a flight to safety due to political uncertainty in France, but has been retracing that move gradually this week.
The gap between Italian and German bunds was also a touch narrower at 148 bps with Italy's 10-year yield IT10YT=RR 2 basis points higher at 3.96%.
Investors on Thursday were also watching central bank meetings, in case of any spillovers into euro zone markets, with the Bank of England the most notable at 1100 GMT.
Earlier on Thursday,the Swiss National Bank cut interest rates for the second time running, pointing to easing price pressures, while Norway's central bank held its policy interest rate at a 16-year high and postponed the prospect of a rate cut.
Reporting by Alun John and Yoruk Bahceli
Editing by Emelia Sithole-Matarise and Frances Kerry
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