LONDON: France’s borrowing costs hit their highest level compared with Germany’s for six weeks on Monday, as investors fretted over the rise of far-left candidate Jean-Luc Melenchon in polls before this month’s presidential vote.

Melenchon’s emergence over the past week has raised the possibility that he will square off against far-right leader Marine Le Pen in the election’s decisive second round in May, making the final result unpredictable.

“Two weeks ago, investors were starting to get comfortable with the idea of a Macron victory, but with the rise of Melenchon this is on the verge of becoming a four-horse race,” said Rabobank strategist Lyn Graham-Taylor.

“A Melenchon win would be a very market-unfriendly event,” Graham-Taylor added. “Enough reason to go short on France if you weren’t already.”

The gap between French and German bond yields has shot wider in recent months on the possibility that Le Pen will win the keys to the Elysee Palace and try to take France out of the euro single currency bloc.

The spread came off its February highs as centrist Emmanuel Macron made gains and polls suggested he would go face to face with Le Pen in the second round and win comfortably.

But recent polls have shown the race tightening as the front-runners faltered and Communist-backed maverick Melenchon surged after strong performances in two televised candidates’ debates.

France’s 10-year bond yield rose as much as 7 basis points to 0.95 percent, stretching the gap with German equivalents to 72 basis points, its widest since Feb. 27. Investors also dumped low-rated South European government bonds such as Italy’s on Monday with yields on 10-year bonds up 2 bps on the day.—Reuters