LONDON, July 3 (Reuters) - The risk premium investors demand to hold French debt narrowed on Wednesday as the prospect of Marine Le Pen's National Rally (RN) winning a majority in France's parliament lessened as anti-RN candidates bowed out in a bid to block the far-right.
More than 200 candidates from the Left Alliance and President Emmanuel Macron's party confirmed they would , as they called on voters to select whichever candidate was best placed to defeat the local RN rival.
"The strategy would significantly limit the chances of Le Pen winning an outright majority," Jefferies chief Europe economist Mohit Kumar said in a note.
"With both the far right or the far left unable to have the numbers to implement extreme policies, the scenario should be a near term positive for the markets."
France's 10-year bond yield was last down 2.5 basis points (bps) at 3.307%. On Tuesday it hit its highest level since November at 3.373%.
The yield spread between French and German 10-year sovereign bond yields - a gauge of the premium investors demand for the extra risk of holding French bonds – tightened to 69.9 bps, its narrowest level in a week.
Germany's 10-year bond yield , the euro area benchmark, was little changed at 2.605%.
Italy's 10-year bond yield was down 3.5 bps at 4.041%.
(Reporting by Samuel Indyk; Editing by Sonali Paul)
((Samuel.Indyk@thomsonreuters.com [Samuel.Indyk@thomsonreuters.com];))
