Europe Friday: Shares Steady After Thursday's Rout, With Bond Yields at Multiyear Highs

European shares opened Friday with a modest rebound. The STOXX 600 rose 0.4% to 629.18 in early trading, Reuters reported via Investing.com, after falling 1.3% on Thursday as global government bond yields hit multiyear highs.

Banks were under pressure. The sector was heading for its worst week since April, according to the report, and Commerzbank fell 2% after a downgrade by RBC. Sportswear maker Puma slipped 1.2% after Nike's weak guidance raised fresh concerns about demand in China.

Bond markets set the tone

The bigger story in Europe this week has been in government bonds. Germany's 10-year yield climbed above 3.6% in late September, its highest since June 2009, Trading Economics reported. France's 10-year yield reached 4.96% on Oct. 1, its highest since July 2002, and the gap between French and German yields widened to about 1.33 percentage points, the widest since May 2012.

French borrowing costs have risen ahead of the government's 2027 budget. Prime Minister Sébastien Lecornu was preparing to announce €54 billion in spending cuts, Yahoo Finance reported.

Money markets are pricing in roughly a full percentage point of European Central Bank rate increases by late 2027, according to Trading Economics. The ECB raised its deposit rate to 2.50% in September.

What to watch today

Flash inflation figures for the euro area for September are due this morning. September price data from France, Italy and Spain came in hotter than expected, driven by fuel costs, according to Yahoo Finance. The U.S. jobs report follows in the afternoon, European time.

Sources

• Investing.com (Reuters), European shares edge higher after bonds-driven selloff
• Trading Economics, Bund yields at 17-year high
• Rallies, French bond yields reach highest since 2002
• Yahoo Finance, Europe stocks extend sell-off into Q4