France's bond yield hits record low as investors want French debt

France's 10-year bond yield hit a record low level on Wednesday, touching close to 2.0 percent, as investors turn to French debt as a safe haven from problems affecting Spain and Italy.

Reuters/Alex Domanski

In late morning trade, the rate of return asked by investors to hold French 10-year bonds fell to 2.010 percent, replacing a previous record set on July 20, before rising back to 2.039 percent.

In recent weeks France has taken advantage of low borrowing rates, offering short term-debt at negative rates, meaning lenders pay for the privilege to lend cash to France.

Eurozone bond yields have eased considerably since European Central Bank chief Mario Draghi last week said the central bank would do everything to safeguard the euro.

Investors have taken Draghi's determined comments to mean that the ECB will launch fresh measures to ease borrowing prices for embattled periphery countries like Spain and Italy, whose rates had soared to danger levels in recent weeks.

The ECB is expected to reveal its hand at its next policy meeting on Thursday.