The Paris stock market slipped and France's borrowing costs spiked today as Prime Minister Sebastien Lecornu resigned after less than a month in office, plunging the country into further political turmoil.
The CAC 40 index of blue-chip stocks was down 1.1% this afternoon, after falling by more than 2% shortly after the announcement.
The yield on 10-year French government bonds, or the country's cost of borrowing, surged briefly to 3.61% before easing to 3.57%.
"If the 3.6% threshold is crossed, French debt could be exposed to massive attacks, making markets more nervous," said Antoine Andreani, who heads research at XTB France, a trading platform.
The spread between French bonds and their German equivalent - a key measure of how investors perceive France's credit risk compared to Germany - reached its highest in nine months.
The gap hit 89 basis points compared to 81 the day before.
"Lecornu's resignation has plunged the political arena into uncertainty. Investors fear a domino effect on economic and fiscal policy," Andreani said.
President Emmanuel Macron named Lecornu, a former defence minister, to the post last month - the shortest stint for a prime minister in modern France.
The largely unchanged cabinet he unveiled late last night sparked fierce criticism across the political spectrum.
Lecornu had faced the daunting task of finding approval in a deeply divided parliament for an austerity budget for next year.
Lecornu's two immediate predecessors, Francois Bayrou and Michel Barnier, were ousted by the legislative chamber in a standoff over the spending plan.
