French 10-year yield falls slightly after hitting highest since March

LONDON, Aug 28 (Reuters) - France's 10-year government bond yield fell slightly on Thursday but remained close to its highest level since March as concerns about the country's fiscal path lingered before a confidence vote in the government next month.

France has found itself repeating last year's market wobble as Prime Minister Francois Bayrou called a confidence vote for September 8, seeking the backing of opposition parties for his plan to cut debt and bring the deficit under control.

But the opposition from both the left and the right have said they will reject his proposal and look likely to end Bayrou's time in office, possibly paving the way for new legislative elections and delaying plans to shrink the deficit.

France's 10-year government bond yield FR10YT=RR was down 1.5 basis points at 3.5% on Thursday after touching its highest since March the day before.

The gap between French and German 10-year yields DE10FR10=RR, a gauge of the premium investors require to hold French debt, was at 80 bps, close to its widest level since April reached on Wednesday. Last year the spread touched 90 bps, its widest level since the euro zone crisis in 2012.

"Near term, we continue to have a negative view on France and expect further pressure on spreads," Jefferies economist Mohit Kumar said in a note.

Germany's 10-year yield DE10YT=RR, the euro zone benchmark, was little changed at 2.694%.