By Christopher Whittall

LONDON--Short-dated German government bond yields sank to fresh record lows Friday, as investors seek safe havens ahead of France's presidential election and the European Central Bank buys up the country's debt.

The yield on the two-year German government note fell to -0.95% recently, according to Tradeweb, down around 0.03 of a percentage point on the day. Yields fall as prices rise. Meanwhile, the yield premium over similar French government debt has widened to around 0.4 of a percentage point from less than 0.1 of a percentage point in early January.

Investors have sold down French government bonds amid concerns that far-right candidate Marine Le Pen could win this spring's election. Ms. Le Pen favors pulling France out of the euro, a move that could call into question the future of Europe's monetary union.

Much of that selling came initially in longer-dated securities, with the difference between yields on 10-year German bonds and French bonds widening to the highest level in over four years earlier this week. Selling has intensified in shorter-dated bonds as the week progressed.

Analysts say the European Central Bank's is exacerbating the move as its EUR2.3 trillion ($2.4 trillion) bond-buying program hoovers up German bonds, causing a shortage.

Underscoring the impact of its bond-buying program, some bonds the ECB can't buy yield more than bonds that it can. For instance, German debt maturing in March, which is too short-dated to be eligible for the program, yields more than the two-year note at -0.79%. Typically shorter-dated debt yields less.

The fall in two-yield yields has come "as fears regarding a possible breakup of the eurozone start to resurface against a backdrop characterized by a shortage of German collateral," said Mark Dowding, co-head of investment-grade at BlueBay Asset Management, in an email.

Like many other investors, Mr. Dowding believes a Le Pen victory is a "tail risk," or unlikely.

But, "there is more scope for sovereign spreads in the region to widen, rather than tighten in the short term, as it is unlikely that political uncertainty abates in the next few weeks," he said.

Write to Christopher Whittall at christopher.whittall@wsj.com

(END) Dow Jones Newswires

February 24, 2017 08:42 ET (13:42 GMT)

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