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PM Lecornu resigns

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French risk premium spikes to January high

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French banking shares, bonds under pressure

LONDON, Oct 6 (Reuters) - French stocks and bond prices

tumbled, while the euro dropped on Monday, following the

resignation of Prime Minister Sebastien Lecornu in the face of

mounting pressure from leftist lawmakers over his budget plans,

thrusting the euro zone's second-largest economy deeper into

crisis.

Paris' CAC 40 dropped 1.5%, making it the

worst-performing index in Europe, as banking shares came under

heavy fire, leaving BNP Paribas, Societe Generale

and Credit Agricole down 4-5%.

The euro slid 0.7% on the day to $1.1665.

French bonds came under pressure, pushing yields on

benchmark 10-year debt up 7.4 basis points to

3.585%. That left the premium investors demand to hold French

debt, rather than triple-A rated German paper, at

86.58 bps, the most since January this year.

This spread hit a 2012 high of 90 bps in last November.