PARIS (Reuters) - The European Central Bank pays close attention to the smooth functioning of financial markets, ECB President Christine Lagarde said on Monday, after French President Emmanuel Macron's call for a snap parliamentary vote last week spooked investors.

Investors were demanding a 77-basis-point premium for lending to AA-rated France over triple-A Germany for 10 years in Monday morning trade, little changed from Friday after climbing 29 bps last week in its biggest weekly rise since 2011.

Asked if the spread was a concern, Lagarde told reporters at an event near Paris: "Price stability goes hand in hand with financial stability. We pay close attention to the smooth functioning of financial markets, and today we continue to do so."

(Reporting by Leigh Thomas; Editing by Richard Lough and Bernadette Baum)