Euro zone investors are feeling increasingly queezy over the growing sense of risk surrounding elections across Europe, and Greece's bailout. As David Pollard reports, the nerves are driving yields on some bonds sharply higher.
Greece has put out political flames in recent years. Right now, the issue could be real ones .... Thousands of firefighters on strike in a familiar battle of job security versus austerity. Here the heat is on Francois Fillon. The one-time front-runner in France's presidential race now lagging in the polls. A scandal over his wife's state earnings refusing to go away. Rival Emmanuel Macron also getting scorched - the centrist forced to deny rumours of an extramarital affair. After Brexit and Trump, another unlikely triumph now seen as less unlikely. For a National Front leader who could steer France away from the euro zone. (SOUNDBITE) (French) FRENCH FAR-RIGHT LEADER, MARINE LE PEN, SAYING: "The division is not between right and left anymore, but between patriots and globalisation." While Fillon and Macron are on trial by the media, France and Greece are on trial by the markets. The risk investors attach to French bonds over their German counterparts now at its highest in four years. For Greece, it's the bailout blues - as wrangling between Athens and its IMF and EU creditors unnerves traders. SOUNDBITE (English) SENIOR FX STRATEGIST, RABOBANK, JANE FOLEY, SAYING: "Some investors will keep this on the back burner, but certainly we will be seeing some negative headlines in the next few weeks." Two-year Greek debt yields soared to near 10 percent on Tuesday, compared to around six percent just weeks ago. But Italian yields also spiking as elsewhere too, the sense of risk rises. (SOUNDBITE) (English) CHIEF ECONOMIC ADVISER, CEBR, VICKY PRYCE, SAYING: "There are so many uncertainties in Europe right now, such as the elections. Not just in France, but Germany, the Netherlands, the populist movements, concerns about relationships with Trump, the Brexit effect, which many countries have already said have been negative for them." And negative for the euro - the single currency losing over a percent against the dollar just this week.