By Lawrence Delevingne and Amanda Cooper

BOSTON/LONDON (Reuters) -Stocks in the U.S. and Europe gyrated on Monday after France’s far-right and left-wing parties said they will vote for a no-confidence motion against Prime Minister Michel Barnier, a move that is likely to cause the French government to collapse later this week.

French equities fell about 0.6% while broader European shares pulled back on the news, last up about 0.3% on the day.

Wall Street stocks were mixed on Monday, boosted by technology stocks, while investor focus remained on a slew of economic data this week. The Dow Jones Industrial Average fell 0.32% to 44,768, the S&P 500 rose 0.2% to 6,045 and the Nasdaq Composite rose about 1% to 19,408.

The euro itself gained little respite, down 1% to $1.0468, as the dollar got a boost during the weekend from U.S. President-elect Donald Trump, who warned BRICS emerging nations against trying to replace the greenback with any other currency.

The euro has lost some 14.5% in value over the last three months, in part because of concern that the health of the euro zone economy might require the European Central Bank to deliver deeper interest rate cuts than previously expected. [EMRG/FRX]

France’s National Rally had given Prime Minister Michel Barnier until Monday to yield to the far-right party’s demands for concessions in his proposed budget or face the possibility of it backing a no-confidence motion.

The risk premium that investors demand to hold French government debt jumped on Monday. The gap between France and Germany’s 10-year bond yields – a measure of French borrowing costs compared with the euro zone benchmark – rose as much as 7 basis points to 87.4 bps, although it remained below last week’s 12-year high of 90 bps .

“Heightened political uncertainty could also play a role at the margin in keeping alive market expectations for larger 50 bps ECB rate cut this month although the hard economic data is not fully supportive,” MUFG currency strategist Lee Hardman said.

DOLLAR FIRM

Beyond France, global stocks edged higher, leaving the MSCI All-World index up about 0.1%.

The Federal Reserve is in sharp focus and Friday’s monthly payrolls report could be the deciding factor when policymakers consider whether or not to cut rates again on Dec. 18.

A number of Fed officials are due to speak this week, including Fed Chair Jerome Powell on Wednesday. Traders put the odds of a quarter-point reduction at about 60%.

That has left the dollar index, which measures the currency against six others, up 0.6% at 106.67, having gained 1.8% in November.

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