Sept 1 (Reuters) – European shares dipped on Tuesday, pressured by a fresh rise in government bond yields as investors braced for higher interest rates.
The pan-European STOXX 600 slipped 0.2% to a more than one-week low by 0815 GMT.
Britain’s FTSE 100 fell 0.5% as trading resumed after Monday’s bank holiday while Germany’s DAX slipped 0.5% and France’s CAC 40 gained 0.2%.
Global bond yields hit major new highs as renewed fighting in the Middle East lifted oil prices and stoked concerns about rising inflationary pressures. Germany’s 30-year government bond yield rose to a fresh 15-year high, while France’s 30-year yield climbed anew to touch its highest since 2008. [GVD/EUR]
European natural gas prices have surged in recent days, with the benchmark Dutch and British wholesale gas prices rising after the first exchange of direct attacks between the United States and Iran in a month renewed fears about even more prolonged supply disruption.
The surge in energy prices as well as hawkish remarks from Federal Reserve Chair Kevin Warsh last week have prompted investors to price in interest rate hikes from major central banks. Traders expect the European Central Bank to hike rates by 25 basis points as early as next week, LSEG data showed.
“In our interpretation, this still falls into the ‘insurance’ hike classification, but further tightening from there – which is widely priced in by markets – would instead imply that the ECB sees restrictive policy as necessary, a much bolder move unless data shows a core inflation uptrend,” ING analysts said in a note.
Euro zone inflation figures for August, which could offer fresh clues on the interest rate trajectory, are expected later in the day.
Growth in the euro zone’s manufacturing sector hit its fastest pace in more than four years in August, driven by the strongest rise in new orders since early 2022 and output expanding at a robust rate, an S&P Global survey showed.
Signs of a resilient euro zone economy and strong earnings pushed the STOXX 600 to a record high in early August, although the recent selloff in stocks has shaved 2% off the index.
Energy stocks in Europe rose 1.4% as Brent crude traded around $92 a barrel. [O/R]
Reckitt Benckiser Group added 4.2% after a jury favoured the company in its trial over claims the company failed to warn that its products for premature babies could cause a deadly bowel disease.
Shares of Air Liquide climbed 2.9% after media reports said activist investor Elliott Investment Management has built a stake in the French multinational company.
Partners Group shed 7.7% after the Swiss private equity firm reported a drop in half-yearly profit and said CEO David Layton will step down from the executive team in January next year.
(Reporting by Sudeshna Ghoshal and Sruthi Shankar in Bengaluru; Editing by Nivedita Bhattacharjee and Mrigank Dhaniwala)
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