French stocks are poised for a rebound, strategists at a Wall Street bank have said, as Emmanuel Macron battles to stop Marine Le Pen’s nationalists from power.

The Cac 40 in Paris slumped as much as 6.7pc in the days following the French president’s shock decision to call a snap poll amid fears that the far-Right National Rally could win power.

Bond markets also slumped amid concerns that the party would increase government spending as France grapples with national debt at 112pc of GDP.

However, the Cac 40 rebounded by 1.2pc on Wednesday as far-Left and centrist candidates stood down for the second round of voting this weekend, potentially blocking the path for Ms Le Pen’s party to secure an outright majority.

Morgan Stanley strategist Marina Zavolock said that either a hung parliament or National Rally majority would “ultimately be followed by relief rallies in French and wider European equities”.

A majority for National Rally “could result in a rebound like the one seen in Italy assets in 2022 elections”.

They advised investors to buy the dip in European defence, Italian banks, BNP, Saint Gobain and Veolia.

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