Europe midday: Shares dive on rising bond yields, oil price

(Sharecast News) - European shares were sharply lower on Thursday as bond yields spiked across the globe and oil jumped above $100 a barrel on supply fears after reports that China was suspending some shipments.

The pan-regional Stoxx 600 index was 0.81% lower to 629.96 at 1035 GMT, having hit a six-month low of 626 earlier in the session. Government borrowing costs surged, with yields on US 10-year Treasuries, a global benchmark, hitting their highest level since 2002.

In France, the 10-year bond yield jumped to its highest level since 2002 as the government prepared to unveil its 2027 budget later in the session. France's CAC 40 fell 0.64%.

Oil prices fell overnight on the back of recovering crude exports from the Gulf and a surprise rise in US inventories, which eased supply concerns. However, by early Thursday morning they were back on the rise on reports China had suspended some oil products exports for delivery this month.

Brent crude futures rose more than 2% to around $100 a barrel and US West Texas Intermediate crude increased 1.55% to $91.82.

Markets largely ignored data from the US showing August's personal consumption expenditures price index - the Fed's preferred measure of inflation - rose a seasonally adjusted 0.3% month on month and 3.4% annually against forecasts of 0.3% and 3.7% respectively.

July's reading was also revised downwards, reducing bets on a Fed rate hike this month. However, analysts noted that the data was old and did not reflect September's surge in diesel prices.

US President Donald Trump's failure to extricate America from of his war of choice on Iran, in turn creating inflationary pressure, also weighed on sentiment.

"Global bonds sold off more than 2% in September, the most since 2024, after Donald Trump was elected for a second term. Back then, bonds sold off due to Trump's expected expansionary fiscal policy. Today, bonds are selling off on the back of his foreign policy, as well as his fiscal largesse," said XTB research director Kathleen Brooks.

"While bond markets are pricing in stronger growth across the developed world, there is also the realization that there is now a structural premium attached to the oil price and to refined products. This will keep prices elevated for the long term, as it does not appear that a neat diplomatic solution to the war in the Middle East will be reached any time soon."

In equity news, Zealand Pharma shares plunged by 10% fell after German partner Boehringer Ingelheim reported results from a late-stage clinical trial of an obesity drug candidate licensed from the Danish biotech that showed nearly 20% of patients dropped out.

Reporting by Frank Prenesti for Sharecast.com