The French stock market rebounded slightly, and the bond market remained stable, temporarily suspending the sell-off caused by previous political risks.

French assets stabilized in early trading on Wednesday, pausing a market sell-off triggered by concerns that a key vote next month could lead to the collapse of the government. The French CAC 40 index rose 0.4%, after two consecutive days of losses. Bond markets were relatively stable, with the yield spread between French and German bonds narrowing by 1 basis point to 77 basis points, a level not seen since April. French Prime Minister Franois Baroin has called for a confidence vote on September 8, in an effort to gauge support for the government's budget plan. Guillaume Rigeade, co-head of fixed income at Carmignac, warned that if the political crisis in France worsens, the yield spread on 10-year French bonds compared to German bonds could soar to 100 basis points, a level not seen since 2012.