French stocks edged higher on Friday and the euro was seeing marginal gains against the U.S. dollar as trading resumed after the Christmas holidays.
The benchmark CAC 40 was up 21 points, or 0.3 percent, at 7,304 in cautious trade.
Banks traded higher, with BNP Paribas, Credit Agricole and Societe Generale rising 1-2 percent amid a surge in regional government bond yields.
Germanys 10-year bond yield hit 2.346 percent, a peak since late November, in response to a surge in U.S. Treasury yields following a successful seven-year auction.
The yield spread with French bonds widened amid concerns over the countrys fiscal deficit.
Frances new premier Francois Bayrou has vowed to sharply narrow the nations deficit to close to 5 percent of GDP, a level his predecessor unsuccessfully tried to reach.