Global Market: European shares slide as surging bond yields hit risk appetite

European shares started the final quarter of the year on a weaker footing on Thursday. Investors turned cautious as global bond yields hovered near multi-year highs and concerns about the path of interest rates weighed on risk appetite, according to a report by Reuters.

The pan-European STOXX 600 fell 1% to 628.1 points by 0720 GMT, touching its lowest level since mid-September. Most European sectors declined, with banks among the biggest losers.

Government bond markets faced heavy selling pressure in September, driving yields sharply higher. According to Reuters, the rise reflected persistent inflation concerns, higher energy costs, and expectations that the artificial intelligence boom could support economic growth, reinforcing the view that interest rates may remain elevated for longer.

The U.S. 10-year Treasury yield climbed to a multi-decade high of 5.3168%, adding pressure on global equity markets as higher borrowing costs can reduce the appeal of riskier assets and raise financing costs for companies.

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Oil prices provided some relief to inflation concerns, however, slipping below the key $100-a-barrel threshold. Reuters reported that recovering crude exports from the Gulf and an unexpected rise in U.S. inventories helped ease supply concerns.

Investors were also awaiting eurozone unemployment data later in the day for further clues about the region's economic health and the potential path of monetary policy.

Among individual stocks, Britain's Gamma fell about 3% after Dutch private equity firm Waterland withdrew its takeover offer, adding pressure on the communications services company.

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The weakness in European equities at the start of the fourth quarter follows a turbulent September for global bond markets, as investors assess the implications of higher energy prices, inflation risks, and the prospect of interest rates staying higher for longer, the report stated.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)
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