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26 Feb 2021 | 08:29

Europe open: Shares fall as rising bond yields send investors scurrying

(Sharecast News) - European shares fell at the opening of the week's last session as rising bond yields and a softer Wall Street dampened sentiment. The pan-European Stoxx 600 index was down 0.79%, marking a 1.55% fall over the last five days. All major regional bourses were lower.

Wall Street stocks finished in negative territory on Thursday, with the Dow Jones easing off highs after registering another record close.

Rising rates were again in focus after the US 10-year Treasury yield rose above 1.5% to end the day at 1.52%, with fears that higher rates could spur investors to rotate out of stocks and into bonds persisting.

"The tantrum in the bond market has inevitably spilled over into equities as the spectre of inflation increases," said Richard Hunter, head of markets at Interactive Investor.

"Despite the soothing noises of the Federal Reserve, the repricing of inflation expectations is of concern. With excessive liquidity in the system and with the likelihood of a major release of pent-up demand as pandemic restrictions ease, inflation could soon spiral. In turn, this would put pressure on central banks to raise interest rates to quell the rise, affecting corporate lending and, importantly, the US mortgage market."

In equity news, shares in Belgian telecoms group Proximus slumped as the company on Friday said it expected lower core profit for 2021 on the back of anticipated additional spending on fibre migrations and IT transformation, and less savings from Covid-19 measures.

French information tech group Sopra Steria fell after the company said the Covid‑19 pandemic and October 2020 cyberattack had a negative impact on business activity estimated at around 10 points of growth.

Net annual profit fell to €106.8m from €160.3m in 2019.
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