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Markets hit by uncertainty of French election

France's President Nicolas Sarkozy and German Chancellor Angela Merkel give a news conference following a Franco-German intergovernmental meeting at Elysee Palace on February 6, 2012 in Paris, France.

Jeremy Hobson: European markets are down significantly as well, and that's being blamed on elections over the weekend in France that increase the likelihood that Conservative President Nicholas Sarkozy will lose his job. Sarkozy came in second
to Socialist Francois Hollande in the country's first round of voting. The two candidates will face-off on May 6th.

And that's where we'll begin with Julia Coronado, chief economist with the investment bank BNP Paribas. Good morning.

Julia Coronado: Good morning.

Hobson: So Julia, a lot of concern out there that if Hollande wins, that because he's a socialist, he's going to change policy when it comes to European debt and the continent may go back into crisis mode.

Coronado: I think those worries are probably overdone. In fact, Hollande is very much a centrist, and very pro-Europe. So yes, he will no doubt pursue a more socialist approach to governing, but he is not radical and not about to overturn some of the things that have been put in place in the eurozone.

Hobson: So what's the problem then? Why are people across Europe so concerned about the possible impact -- economically -- here?

Coronado: It's really the instability factor. We know that Sarkozy and Merkel have been important partners in engineering solutions to crisis, and we know that one of those partners is about to change. And we don't know what the political landscape will look like going forward. Keep in mind that Angela Merkel herself will be up for re-election next year -- so it's really the instability factor, I think, that worries the markets.

Hobson: Lots of European politics to look forward to. Julia Coronado, chief economist with the investment bank BNP Paribas, thanks as always.

Coronado: It's a pleasure.

About the author

Julia Coronado is chief economist at BNP Paribas.

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