European shares were holding lower come midday but had come off their worst levels, even as rising bond yields kept equities under pressure as traders punted on an early rise in US interest rates.
The pan-European Stoxx 600 index fell 1.08% to 479.24 as tech stocks came under pressure. Meanwhile, oil prices rose to a seven-year high on worries about possible supply disruptions after Yemen’s Houthi group attacked the United Arab Emirates. The news boosted oil giants BP and Shell.
Germany’s Dax was off by 1.01% at 15,773.38 albeit off its lows of the session.
Benchmark 10-year German and Spanish government debt was little changed, but yields on similarly-dated US Treasuries were again moving higher.
Investors now expect the US Federal Reserve to start lifting interest rates from March in an attempt to tame inflation while UK labour data on Tuesday beat expectations, making a rate rise in early February extremely likely.
On the Continent meantime, the ZEW institute’s economic confidence gauge for Germany leaped higher from a reading of 32.0 for December to 51.7 in January (consensus: 32.0).
“European markets have opened lower with technology underperforming amid concerns about faster tightening from the Fed and rising yields as Britain’s 10-year gilt yield hits a three-month high and Germany’s 10-year government bond yield rises to the highest since May 2019. US markets get set to reopen after Monday’s holiday with futures pointing to a softer open,” said Victoria Scholar, head of investment at Interactive Investor.
In equity news, Vivendi shares were lower after the company said it was investing in digital communication group Progressif Media through the purchase of an 8.5% stake from ZeWatchers.
French food caterer Sodexo was higher on reports Bain Capital was looking to bid for a stake in its benefits and rewards services unit.
THG shares slumped to the bottom of the Stoxx after the UK online retail platform reported a 29.7% rise in fourth-quarter revenue, but said its adjusted core earnings margin would fall short of market expectations due to adverse currency movements.
888 Holdings lost ground even as the online betting and gaming company said full-year revenues had grown year-on-year despite a drop in the final quarter of 2021.
