French government bond yields remained largely unchanged on Monday despite Fitch Ratings revising the country's outlook to negative from stable, as investors assessed domestic political uncertainty and developments in the Middle East.

Fitch warned that France's deteriorating fiscal position and political fragmentation were weakening prospects for stabilising public debt. The ratings agency announced the outlook revision after Friday's market close, highlighting growing concerns over the country's public finances.

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However, French bonds showed little immediate reaction in early Monday trading, with the 10-year government bond yield holding steady at 4.97%. Eurozone government bonds also remained broadly stable, suggesting investors were not rushing to reprice sovereign debt risks following the announcement.

French borrowing costs have come under significant pressure in recent months as domestic fiscal concerns coincided with a broader global bond selloff. Rising energy prices, persistent inflation concerns and elevated borrowing requirements among governments and companies have weighed on bond markets.

France's 10-year bond yield climbed to 5.14% last month, its highest level since 2002, reflecting mounting investor concerns over the country's fiscal outlook and political instability, Reuters reported.

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Meanwhile, easing energy prices offered some relief to European bond markets on Monday. Brent crude futures traded around $110 a barrel, retreating from last week's highs near $118, as Iranian and Qatari officials entered a third day of discussions aimed at securing an agreement to end the US-Israeli war on Iran.

Benchmark European natural gas prices also declined nearly 2%, helping temper some immediate concerns over energy-driven inflation.

Germany's 10-year government bond yield, the benchmark for euro zone borrowing costs, was steady at 3.33% on Monday.

Investors are likely to remain focused on developments in France's domestic politics and fiscal policy, alongside geopolitical tensions and energy market movements, as they assess the outlook for European government bonds.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times.)