Left wing bloc wins most seats, but no overall majority
Banks steady after early falls, CAC40 up 0.4
OATBund spread choppy but last around 1 bp narrower
Investors apprehensive as policy outlook remains uncertain

LONDON, July 8 Reuters French shares and bond prices turned higher in early trading on Monday after initial falls as investors digested elections which left France facing a hung parliament and the prospect of taxing negotiations to form a government.

A surprise leftwing surge in Sunday39;s election blocked Marine Le Pen39;s quest to bring the far right to power in the National Assembly but no single group secured a working majority.

That meant French assets traded choppily at the open as traders struggled to process relief at the absence of a far right victory, concern about a more powerful left, and uncertainty about who will eventually form a government.

France39;s bluechip CAC40 share index was last up 0.4, reversing an earlier fall, though still down around 4 since the election was called in early June.

Societe Generale and BNP Paribas which had opened down around 1, were last a touch higher.

Bond markets too were uncertain how to price the outcome and the gap between Germany and France39;s 10 year bond yields widened to as much as 71.1 basis points but was last a touch narrower at 66.5 bps.

That spread reflects the premium investors demand to hold French debt rather than euro zone benchmark Bunds. It widened to above 80 basis points in the buildup…