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Europe's 'fear gauge' is rising ahead of first presidential vote in France this weekend

French bond yields widened their gap against German bunds on Tuesday morning as opinion polls showed increased uncertainty regarding who will become the next president of France.

The French 10-year bond yield rose 2.5 basis points in early Tuesday trade to 0.93 percent, while German Bund yields moved slightly lower at 0.18 percent. The gap between the two is close to a six-week high, Reuters reported. The spread is used as a "fear gauge" by investors ahead of the French elections.

"On the one hand the OAT( French government bonds) / Bund yield spread continues to knock around at levels that haven't been seen since 2012 and Mario Draghi's 'whatever it takes' moment. On the other, 73 basis points this morning is a lot tighter than the 150 basis points 2012 peak, let alone the levels near 200 basis points we saw in 2011," Kit Juckes, global fixed income strategist at Societe Generale, noted in an email.

"There's a sense of pre-election nervousness as we enter the final days of first-round voting, but it's not disorderly by any stretch of the imagination," he added.

An Elabe poll showed the centrist Emmanuel Macron winning the first round of the election with 24 percent of the votes, closely followed by the far-right leader Marine Le Pen with 23 percent. Not far behind came the conservative Francois Fillon with 19.5 percent and the far-left candidate Jean-Luc Melenchon with 18 percent.

The projections indicate that the first round will be closely disputed as any two could make it into the final round on May 7th.

Over the Easter break, frontrunner Macron denied allegations of impropriety, saying he did not have offshore accounts or a hidden inheritance. The reports could damage his chances less than a week to go until the first round.

Fillon, the conservative candidate, was ahead in polls a couple of months ago, before authorities began investigating him for alleged misuse of public funds. Far-right leader Le Pen has also been involved in allegations of misused funds, though her polling figures were not hurt.

JP Morgan said Thursday that Macron is likely to win the French election even though the race has tightened in recent days.

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