LONDON, July 8 (Reuters) - French government bond yields were little changed on Monday as investors waited for more information about the shape of the next French parliament, after a surprisingly strong showing by the left in Sunday's election.

French yields briefly traded at their lowest premium to German debt in almost a month before reversing course. The so-called spread hit its highest since the euro zone crisis in 2012 in late June as investors worried about a possible far-right victory.

The yield on France's benchmark 10-year bond was very slightly lower on the day at 3.209%, having gradually retreated from a high of 3.37% last week.

German 10-year debt, meanwhile, was up 1 basis point (bp) at 2.541%, leaving the gap with French yields, which reflects the premium investors demand to hold French debt rather than Bunds, 1 bp narrower at 66.6 bps.

That spread briefly hit a session low of 63.7 bps, the smallest since June 13.

The leftist New Popular Front emerged as the dominant force in the National Assembly after Sunday's election. Yet no single grouping secured a majority, triggering tricky negotiations that could result in an unwieldy coalition or a minority government.

President Emmanuel Macron's alliance came in second place, with the far right National Rally ending third after leading in the polls for weeks.

"The left wing alliance is not seen as business friendly and should command less faith in prudent budget management," said Peter Schaffrik, global macro strategist at RBC Capital Markets.

"However, the lack of a clear majority in the Assembly should blunt any spending plans for the time being and act as a cushion for spread widening."

Elsewhere, Italian 10-year yields fell 1 bp to 3.929%. That left the Italian-German yield gap 3 bps narrower at 138 bps.

Bond markets were waiting for key U.S. consumer price index inflation data on Thursday, which will influence the U.S. Federal Reserve's upcoming interest rate decisions.

Investors will also be listening closely when Fed chair Jerome Powell testifies before Congress on Tuesday. Given the size and importance of the U.S. economy and dollar, Fed decisions reverberate through global financial markets.

(Reporting by Harry Robertson and Amanda Cooper; Editing by Bernadette Baum and Arun Koyyur)