Europe midday: Rising French bond yields hit sentiment as Stoxx extends losses

(Sharecast News) - European shares opened lower with political volatility in France in focus amid rising bond yields and soaring debt, while another tech sell-off in Asia overnight also hit sentiment.

The pan-regional Stoxx 600 index was down 0.62% with all major bourses lower. France's CAC 40 fell 0.74% and the yield on 10-year government bonds rose 1.4 basis points to 4.94% making the spread with safer German bonds now 151 basis points.

French authorities imposed curfews in Paris, Marseille and Lille and promised financial support for affected businesses after cost-of-living protests over the weekend escalated into violence, vandalism, and looting.

The country's ability to boost spending remains constrained by one of the largest debt burdens and budget deficits in the eurozone, limiting the government's scope to quell public discontent.

Fuelled by rising living costs and a perceived decline in public services, the protests have dented investor confidence in an economy already struggling with weak growth and mounting debt. The unrest has also raised concerns that the far-right National Front could emerge as a leading force ahead of the 2027 presidential election in the eurozone's second-largest economy.

Political uncertainty was also evident in Spain, where the benchmark IBEX 35 shed 1.5% on Monday before edging 0.07% lower in early trade on Tuesday. Investor sentiment has been tempered by a snap election due next month.

Adding to the uncertainty, Spain's hard-left parties on Saturday unveiled separate electoral lists, a move seen as weakening Socialist Prime Minister Pedro Sánchez's chances of retaining power at the head of a left-wing coalition.

Asian markets were in the red on Tuesday with South Korea leading regional losses as concerns over potential overinvestment in artificial intelligence continued to dog investor sentiment.

Global tech stocks were hit as South Korea's Kospi Index closed 3.73% lower as scepticism over AI returns hit chipmakers.

Heavyweight SK Hynix fell 7% at one point. Data-center infrastructure company Elice plunged as much as 32% in its trading debut in Seoul.

In oil markets, Brent crude surged again to above $111 a barrel, despite the possibility of more Russian supplies hitting the market as US President Donald Trump pondered a waiver on new sanctions legislation against Moscow.

On the equities front, shares in ABB fell despite the Swiss engineer reporting a record in quarterly orders driven by the boom in spending on AI data centres used to power artificial intelligence helped push its quarterly orders to a record, as the Swiss engineering group announce.

Reporting by Frank Prenesti for Sharecast.com