European shares moved modestly higher on Friday after falling to three-month lows in the previous session, while investors continued to monitor government bond yields and France’s fiscal outlook.
The pan-European STOXX 600 gained 0.2% in early trading, following its largest one-day decline in three weeks. Despite Friday’s increase, the index remained down nearly 2% for the week and was on course for its weakest weekly performance since mid-April.
Germany’s DAX, France’s CAC 40 and the UK’s FTSE 100 each advanced 0.2% in early trading.
French Bond Spread Reaches Widest Level Since 2012
European government bond markets remained in focus following increases in sovereign borrowing costs and the release of the French government’s draft 2027 budget.
France’s 10-year OAT yield reached its highest level since 2002, while the spread between French 10-year government bonds and benchmark German Bunds widened beyond 140 basis points, according to Reuters.
That represented the widest spread between the two benchmarks since the eurozone sovereign debt crisis in 2012.
The euro also declined against the U.S. dollar, reaching its lowest level since 2025, according to the supplied information.
Eurozone Inflation and U.S. Employment Data Awaited
Investors were also awaiting preliminary September inflation figures for the eurozone.
Economists surveyed by Reuters expect headline inflation to increase to 3.6% from 3.2% in August, with higher energy costs linked to the Middle East conflict among the factors affecting the forecast.
Attention is also focused on the September U.S. employment report.
The data could influence expectations for Federal Reserve monetary policy and government bond yields in the United States and other major markets.
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