Europe midday: Shares extend losses as rally fizzles out on higher bond yields, oil

(Sharecast News) - European shares were down sharply on Wednesday, snapping a three-day winning streak bond yields rose again and oil prices sat above $100 a barrel after Houthi attacks on Saudi oil pipelines disrupted the recent supply recovery.

The pan-regional Stoxx 600 index was down 1% to 630 at 1048 GMT with all major bourses lower. Brent crude was up 1.14% to $101.73 a barrel as the US war on Iran showed no signs of reaching a truce.

Wall Street shares surged overnight as renewed confidence in the AI trade and easing bond yields lifted stocks on Tuesday, with the S&P 500 and Nasdaq closing at record highs.

Yields had eased overnight, but began climbing again in early trade, with French bonds up on political turmoil. Benchmark 10-year French bonds were up as high as 12 basis points to 4.85%, after falling about 11bps on Tuesday.

This put the euro under renewed pressure, falling 0.6% against the dollar below $1.12, to $1.1191.

"The global bond sell off slowed, crude oil fell and the US dollar eased yesterday. Lower oil prices and less pressure on yields supported major US indices, pushing the S&P500 and Nasdaq 100 to fresh record highs. But this morning, oil is rebounding, yields are pushing higher and the dollar is stronger as risks loom," said Swissquote analyst Ipek Ozkardeskaya.

"Tensions in the Middle East remain unresolved and upside risks persist. Even more so as global oil inventories have been depleted; Saudi Aramco's CEO warned that the supply cushion is 'scarily thin'."

In equity news, shares in British water utility Pennon Group slumped as the company launched a fully underwritten £550m rights issue and cut its dividend.

Bridgepoint surged after lifting earnings guidance.

Reporting by Frank Prenesti for Sharecast.com