French snap elections worry investors, Paris stock market head says

The prospect of a politically extreme party with little or no government experience taking power after France's parliamentary elections is worrying investors, the chief executive of Paris stock market operator Euronext said on Tuesday.

The far-right National Rally (RN) party looks set to win the most votes in snap parliamentary elections coming up on June 30 and July 7 and could form France's next government, with a left-wing coalition called New Popular Front forecast to come second.

"If a team that has never governed comes to power, there is total uncertainty, a complete unknown," Euronext CEO Stephane Boujnah told France Inter radio in a rare comment about politics.

"There is also a lot of concern about other things that are not economic, for example about what is happening to the unity of French society and the risks that this unity, which could be damaged, could have an impact on business," he added.

Seeking to cast his centrist camp as the last hope for stability, President Emmanuel Macron said in a podcast released on Monday that both the RN party and the New Popular Front risked bringing "civil war" to France.

RN leader Le Pen on Tuesday rebuffed these allegations.

"I think the French have realised that the chaos is him (Macron), he has embodied chaos since he was first elected," she told RTL radio.

MARKET SELLOFF

The president's surprise call for snap elections earlier this month triggered a heavy selloff of French stocks and bonds.

France's economic model makes the country vulnerable when interest rates attached to its sovereign and corporate bonds shoot up, said Boujnah, whose company also runs stock markets in other European hubs including Amsterdam and Milan.

"To continue to finance a system in which 58% of what we create is injected into public spending, we have to borrow heavily from the rest of the world. And we need the rest of the world to give us loans," he said.

Investors and ratings agencies have raised concern about RN's policies such as a pledge to cut value-added tax on energy from 20% to 5.5% and to lower the legal retirement age.

So far, the party has been hesitant to put price tags on its policies, despite promises it would keep France's state budget within the boundaries agreed within the EU.

Jean-Philippe Tanguy, RN's financial pointman, on Tuesday said the party's plan to reverse Macron's pension reform, bringing the legal retirement age back to 62, would cost the state 9 billion euros ($9.65 billion).

"It will be compensated by other measures", he told France Inter radio, adding "our programme is balanced".

($1 = 0.9323 euros)