France is under pressure to reassure markets that it can cope with the deteriorating situation in the eurozone, after official figures showed a slump in industrial production that could wipe out any chance of growth next year.
The eurozone's second largest economy came under fire from the European Union and international investors for not doing more to cut government spending amid fears the debt crisis would escalate and ensnare the French economy.
Bond yields, which determine the interest rate for government borrowing, rose as France snubbed the EU call for more austerity measures, saying the country's latest round of belt tightening would be enough to bring its deficit within EU limits.
The gap between French and German bond yields hit a new record as German yields fell to 1.78% and French yields rose to 3.48% on 10-year bonds.
The febrile atmosphere surrounding Paris was heightened after the ratings agency Standard & Poor's mistakenly issued a notice stripping France of its coveted AAA rating. The agency has threatened to issue a downgrade, which would push up bond yields further, but said the document was a mistake.
Some economists said the gloomy picture in France meant the country had fallen out of the first rank of euro nations. » | Phillip Inman, economics correspondent | Thursday, November 10, 2011
