French borrowing costs rose, but only slightly when the eurozone’s second-largest economy sold government bonds for the first time this year.
On Thursday Paris sold 7.96 billion euros of bonds maturing in 10 to 30 years time after receiving total bids for nearly 15 billion euros worth.
Demand was solid despite concerns France could lose its triple-A credit rating which helped dispel some fears about the ability of governments to fund their massive debts.
“Overall it’s a pretty solid auction,” Michael Leister, strategist at DZ Bank in Frankfurt. “It should be enough to dispel concerns with regards to France’s funding capacity for the time being.”
However the euro slipped as investors remain concerned.
A sterner test will come next week, when Spain and Italy the two big economies seen as most at risk from the crisis are due to issue bonds.
With a heavy schedule of euro zone debt maturing this year, particularly in the region’s No. 3 economy, Italy, traders remain nervous about government finances despite an unprecedented injection of nearly half a trillion euros of cheap ECB funding for banks last month.