Europe close: Banks, chip stocks pull markets lower

(Sharecast News) - European stocks fell sharply on Thursday as weakness in the banking and chip sectors provided a big drag on regional indices.

The pan-European Stoxx 600 index was down 1.1% at 637.73, with heavy losses in Milan, Madrid and Paris in particular showing significant losses given their heavy weighting towards banks, which fell as a result of a sell-off of European government bonds.

French 10-year OAT yields climbed further above the 5% level, up 7.5 basis points at 5.076% to hit their highest since 2002, due to rising fiscal and political concerns. The sell-off saw borrowing costs rise elsewhere in the eurozone, with 10-year yields rising in Germany, Italy and Spain.

Meanwhile, Brent crude was up 2.2% at $111.18 a barrel and West Texas Intermediate was 1.3% stronger at $98.37, after Houthi attacks in Saudi Arabia heightened fears that the conflict in the Middle East was intensifying.

In equity movements, Milan-listed banks UniCredit, Intesa Sanpaolo, Banco BPM, BPER and Monte dei Paschi all fell sharply, along with Madrid-listed peers Santander, BBVA, CaixaBank, Sabadell and Bankinter.

London's Barclays fell as it reported a slightly lower-than-expected third-quarter profit due to weakness in the fixed income division, as it announced a £500m share buyback and confirmed plans to cut around 5,000 jobs this year in an AI push.

Semiconductor stocks also fell across the board amid renewed AI investment concerns, including heavyweights ASML, Infineon and STMicroelectronics.

Shares in Birkin-maker Hermes International tumbled in Paris after challenging conditions in China weighed on third-quarter sales growth. The French luxury group said sales rose 4.3% on a constant currency basis to �4.1bn, below the 5.2% consensus forecast and the weakest quarterly sales growth rate since the start of the pandemic.

Sales at KitKat maker Nestle came in ahead of expectations, helping shares in the Swiss food and drink giant to rise, as its turnaround gathered pace. Third-quarter sales rose 4% to CHF22.8bn, with 2.8% real internal growth ahead of the 1.5% forecast.

In the UK, London Stock Exchange Group surged as it announced the acquisition of credit specialist Octus from Permira for $3.5bn, and lifted its full-year guidance. LSEG said the acquisition will transform its presence in credit and private market data, "creating a leading proposition in these high-growth areas".

Rentokil Initial also rallied after a third-quarter update, in which it announced a $200m share buyback and reiterated full-year guidance. The company also revealed the upcoming retirement of its chief financial officer, Paul EdgecliffeJohnson.