Europe midday: Shares up despite rising bond yields, inflation fears

(Sharecast News) - European shares were up by midday on Friday despite bond yields heading north again with investors sceptical about the US government's ability to quell inflation.

The pan-European Stoxx 600 index was up 0.16% at 1055 GMT with major regional bourses higher. Yields on 30-year US bonds were back up to 5.25%, close to the level they were before Treasury Secretary Scott Bessent said the government would step in and buy more long-dated government debt.

With the war on Iran at a stalemate and fears of an energy supply shock growing as the Strait of Hormuz remains effectively closed, traders are less inclined to believe that Bessent's intervention is to balance the bond market and more of an attempt to steer headlines away from growing government debt which hit $40trln this week - more than 6% of GDP.

"The Treasury move is being seen as a small plaster for a much larger wound," said Interactive Investor head of markets Richard Hunter.

"At the same time, higher yields are a signal that investors demand to be paid more for an increasingly worrying level of government debt, with an additional complication coming from the largest technology firms who are competing for that cash as they continue to invest hundreds of billions of dollars on the AI buildout."

Oil prices edged higher with Brent crude futures up 0.02% to $93.80 a barrel while West Texas Intermediate futures gained 0.06% to $86.88.

In economic news, eurozone business activity appeared to be is growing at its fastest pace this year on the back of new orders, particularly in manufacturing, and renewed export growth, according to flash survey data.

S&P Global's flash eurozone composite PMI Output Index reached its highest since November this month, edging up to 52.1 from 52.0 in July.

In equity news Nibe Industrier shares rose as the Swedish heating, cooling and energy systems manufacturer reported better-than-expected half-year results. Bavarian Nordic surged after announcing a 750m Danosh kroner buyback.

Reporting by Frank Prenesti for Sharecast.com