France has emerged as Europe’s perceived weak link after its 10-year government bond yield reached 4.924% on Oct. 1, the highest since 2002. The yield gap with Germany widened to 1.4 percentage points, its largest since the 2011-2012 European debt crisis. Investors are focusing on France’s fiscal position, including government debt at 119% of gross domestic product in the second quarter, record planned issuance of 340 billion euros next year and projected interest costs of 91.2 billion euros, up from 62.6 billion euros this year. Hedge funds have sold French bonds or increased short positions as yields rise and prices fall, with the pressure spreading to Italy, Spain and Greece. France’s proposed 43 billion euros of spending cuts and tax reforms aim to reduce the deficit to 5% of GDP next year from 5.4% this year, but weaker growth could undermine that effort. Political instability, protests against austerity and uncertainty ahead of the presidential election are making a recovery in French bond prices more difficult. The developments have revived market concerns about wider European sovereign-debt stress, although Reuters reported that the situation is not yet a euro-zone crisis.