PARIS, June 18 — The yield on the French government’s benchmark 10-year bond turned negative today for the first time after ECB chief Mario Draghi hinted at rate cuts.

In mid-afternoon European bond trading, the issue yielded 0.01 per cent, having briefly dipped into negative territory, to -0.0012 per cent, earlier in reaction to Draghi saying rate cuts and other steps to boost growth were on the table.

Any further lowering of rates in the eurozone would be a step further into the unknown for the ECB, which has since 2014 charged banks to park cash with it, using a negative deposit rate now at -0.4 percent.

This means that lending money to a high-quality borrower like the German government has become a loss-making endeavour, but still less so than depositing funds with the ECB instead.

The prospect of still lower ECB rates could take more government bond yields into negative territory.

In addition to Germany, government bond yields are now also negative in fellow eurozone members Austria and the Netherlands.

Outside the eurozone, EU members Sweden and Denmark also have negative interest rates, as does non-member Switzerland.

Financially weaker eurozone members Greece and Italy still have to pay more than two percent of interest to find buyers for their government bonds. — AFP