Europe midday: Shares down, oil up as bond buying rally stalls

(Sharecast News) - European shares were broadly lower on Thursday as a rise in oil and German producer prices overshadowed the overnight rally in US and Asian markets driven by the US Treasury's decision to double its debt purchase programme to stop rising yields driven by inflationary fears and concerns over government spending.

The benchmark Stoxx 600 index was down 0.10 with continental bourses mixed. European sentiment was hit by data showing German factory gate inflation hit a three-year high in July driven by higher energy costs due to the US war on Iran, adding to signs of fresh inflationary pressures in Europe's largest economy.

Prices charged by manufacturers surged 3% year on year last month after June's 1.8% rise and expectations of a 2.7% increase. The price of intermediate goods jumped 5.4% while energy prices rose 3.8% year on year.

Compared with June, producer prices were up 1.1%. The news sent German shares down 0.5% in morning trade on the Frankfurt exchange.

In the US, the Treasury on Wednesday said it would double buyback sizes for long-duration debt, after the 30-year yield hit its highest level since 2007 earlier this week.

Yields on the 10 to 30year part of the curve fell after the announcement with the 30year dropping more than 10 basis points to 5.184%, while the 10year note eased over six basis points to 4.637%. US equity markets rallied on the news.

Oil prices climbed to three-week highs as fears over supply disruption due to the Iran heightened.

Brent crude rose 2.48% to $93.84 a barrel, while US West Texas Intermediate crude futures for September added 2.74% to $86.70 a barrel.

In equity news, JD Sports Fashion slumped as the UK-based retailers cut its profit outlook as US sales fell.

Reporting by Frank Prenesti for Sharecast.com