German, French bond yields at record low on Greek fears

The borrowing costs of Germany, France, Spain and Italy hit new record lows on Tuesday as investors piled in to relatively safe-haven bonds amid uncertainty over Greece's political crisis.

The yield on the German 10-year Bund reached 0.539 percent while the yield on the French 10-year dropped to 0.826 percent.

Yields -- or borrowing costs -- drop when investors buy the bonds of the country concerned.

Other top eurozone members Spain and Italy saw their 10-year yields hit 1.586 percent and 1.884 percent, respectively.

Fearful of fresh uncertainty with snap elections set for next month in Greece, market participants are selling stocks and buying bonds that are seen as a less risky play in troubled times.

The new record lows came amid very thin trading volumes in a holiday session, meaning the moves can be exaggerated.

Greek Prime Minister Antonis Samaras said earlier Tuesday that a snap election -- called for January 25 -- would determine whether the country would stay in the eurozone.

The fresh vote was called after lawmakers failed three times to elect a successor to 85-year-old President Karolos Papoulias, whose five-year term ends in March.

Greek bond yields have spiked on the uncertainty, heading briefly above nine percent on Monday.

In general, eurozone bonds have gained from hopes the European Central Bank (ECB) will buy sovereign bonds in a bid to combat deflation in the euro area.