By Sudeshna Ghoshal
Oct 8 (Reuters) – European shares fell on Thursday as banks slid to a more than three-month low, while a fresh bond selloff and elevated oil prices stoked fears that higher inflation could hurt economic growth.
The pan-European STOXX 600 index was down 0.8% at 625.44 points by 0833 GMT.
European banks dropped nearly 2%, with Germany’s Deutsche Bank, Spain’s Banco Santander, France’s Societe Generale and Italy’s UniCredit falling for a second day as euro zone bond yields climbed towards their recent peaks. [GVD/EUR]
“What you see in the European banks is this growing euro debt crisis that is weighing on growth expectations at a time when energy prices are pushing inflation expectations higher and the ECB is not going to be able to step in a way to give relief to the market,” said Ipek Ozkardeskaya, senior analyst at Swissquote.
France’s benchmark CAC 40 fell 1% to more-than-6-month lows, with the country at the centre of investor concerns as it struggles to rein in a budget deficit exceeding 5% of GDP.
BOND YIELD JITTERS PERSIST
Euro zone bond yields rose sharply on Thursday as rising energy prices added to inflation concerns, while investors continued to dump debt issued by heavily indebted countries such as France and Italy, pushing their borrowing premiums higher.
A broad global bond selloff, fuelled by expectations of further central bank rate hikes and mounting concerns over government debt burdens, has driven yields across many euro area countries to multi-decade highs.
“We’re hearing many investors are now moving to the short side of the trade in terms of peripheral countries versus Germany,” added Swissquote’s Ozkardeskaya.
Most sectors on the STOXX traded lower. Energy shares were a bright spot as oil prices climbed more than 3% on persistent concerns about supply from the key Middle East producing region. [O/R]
With minutes from the Federal Reserve’s latest policy meeting showing officials divided over the case for further rate hikes, attention turns to Europe, where markets will parse the European Central Bank’s latest minutes for clues on the policy outlook.
Several ECB and Fed officials are scheduled to speak later in the day, alongside Bank of England Governor Andrew Bailey.
Among individual stocks, Argenx fell 18.2%, making it the worst performer on the STOXX 600, after the Netherlands-based biopharmaceutical company discontinued a Sjögren’s disease trial after an analysis showed it was unlikely to meet its primary aim.
Bavarian Nordic gained 4.3% after the Denmark-based biotechnology firm raised its 2026 revenue guidance and EBITDA margin forecasts.
(Reporting by Sudeshna Ghoshal in Bengaluru; Editing by Subhranshu Sahu and Mrigank Dhaniwala)
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