FRANKFURT: European shares ended subdued on Monday, with higher bond yields weighing slightly on the main index, as the week began on a cautious note with investors looking ahead to the US Federal Reserve’s monetary policy meeting.
The pan-European STOXX 600 was down 0.1 percent at 578.38 points at close. Major regional indexes were mixed, with London’s FTSE 100 down 0.23 percent and Spain’s IBEX 35 up 0.1 percent.
Real estate stocks were the biggest drag on the main STOXX index, down 1.6 percent, pressured by a spike in long-dated government bond yields across the globe amid concerns about fiscal sustainability.
Germany’s 30-year yield rose to 3.466 percent, after climbing more than 10 basis points last week to its highest level since July 2011. Moves were further influenced by better-than-expected German industrial production data and hawkish comments from influential rate-setter Isabel Schnabel, who hinted that the next move from the European Central Bank may be an interest rate hike, rather than a cut.
Consumer staples stocks weighed, with Unilever down 2 percent. The consumer goods giant completed its Magnum demerger, resulting in the latter getting listed as the Magnum Ice Cream Company with a valuation of some 7.8 billion euros (USD9.1 billion).
L’Oreal fell 2 percent after the French company said it will double its stake in Swiss skincare firm Galderma to 20 percent. Galderma shares were up 1 percent.
On the flip side, industrials advanced 0.6 percent, led by defence firms. Rheinmetall added 3.6 percent, while the broader index climbed 1.6 percent to lead sectoral gains.
The sector has been sensitive to headlines on progress on the Russia-Ukraine war. It logged steep declines in November as a ceasefire looked imminent, but recouped some ground as uncertainty set in.
On Monday, the leaders of France, Germany and Britain staged a strong show of support for Ukrainian President Volodymyr Zelenskiy in London amid mounting US pressure on Kyiv to agree to a proposed peace deal with Russia. Investors also exercised some caution ahead of the Fed’s meeting this week, where the central bank is expected to lower interest rates by 25 basis points.
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