Euro slides as worries about French debt grow

French debt is projected to rise to nearly 122% of the country’s gross domestic product next year, despite billions of euros in planned spending cuts.(AFP) — The euro slid Monday to its lowest level against the dollar in 17 months amid worries about France’s high debt and deficits, which have sent its government bond yields soaring.An underwhelming 2027 budget plan unveiled last week fueled concerns that government spending will remain high ahead of next year’s presidential election, in which far-right leader Marine Le Pen, seen as a fiscal populist, stands a chance of winning.That has rattled bond investors at a time when interest rates — and therefore borrowing costs — are rising in developed economies worldwide to combat inflation.French debt is projected to rise to nearly 122% of the country’s gross domestic product next year, despite billions of euros in planned spending cuts.That has sent the yield on France’s 10-year government bonds to 4.8%, the highest since the 2011 eurozone debt crisis.“The fact that French bonds and the euro sold off last week, and the downward momentum could persist this week, is a sign that Europe is out of favour with investors and bond market vigilantes are watching developments in the eurozone closely,” said Kathleen Brooks, research director at XTB.Spanish Prime Minister Pedro Sanchez’s call for snap elections also surprised investors after lawmakers rejected a hotly debated housing relief bill from his Socialist-led minority government.“France had already been under pressure due to questions over fiscal credibility and political stability,” said Patrick Munnelly, market strategist at Tickmill Group.“Spain now adds another layer of uncertainty,” he added. “Europe’s political risk is weighing on the euro.”Stocks, meanwhile, were broadly higher, with the Nasdaq opening higher after hitting another all-time high Friday following weak U.S. jobs data. The Dow Jones Industrial Average also remained near record territory.The jobs data tempered expectations of an imminent interest rate hike by the Federal Reserve and fueled optimism in Asian and European stock markets that the rally driven by artificial intelligence still has room to run.Paris stocks fell, however, as Schneider Electric shares dropped nearly 10% after the industrial group unveiled a $22.6 billion all-cash deal to buy U.S. engineering software specialist PTC.Lower oil prices provided additional support after Group of Seven countries, in coordination with the International Energy Agency, agreed Friday to immediately release 100 million barrels of diesel and crude oil to ease supply concerns caused by the U.S.-Iran war.Middle Eastern oil exports, excluding those from Iran, surpassed their prewar levels last week despite attacks on ships in the Strait of Hormuz, according to data from maritime tracking firm Kpler.But Saudi Aramco CEO Amin Nasser described oil stockpiles Monday as “scarily thin” as the European winter approaches.Key figures around 1:40 p.m. GMTNew York — Dow Jones Industrial Average: Down 0.4% at 50,079.71 pointsNew York — S&P 500: Up 0.2% at 7,737.11New York — Nasdaq composite: Up 0.6% at 27,354.92London — FTSE 100: Up 0.1% at 10,469.57Paris — CAC 40: Down 1.1% at 7,811.57Frankfurt — DAX: Up 0.1% at 25,249.47Tokyo — Nikkei 225: Up 2.4% at 69,946.86 at the closeHong Kong — Hang Seng index: Up 0.3% at 24,040.34 at the closeShanghai — Composite index: Closed for a holidayEuro/dollar: Down at $1.1193 from $1.1256 FridayDollar/yen: Up at 1578.18 yen from 157.87 yenPound/dollar: Down at $1.3196 from $1.3244Euro/pound: Down at 84.84 pence from 84.99 penceBrent crude: Down 0.6% at $101.69 per barrelWest Texas Intermediate crude: Down 1.5% at $89.71 per barrelSubscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads