Europe midday: Shares hold gains as bond yields ease

(Sharecast News) - European shares were higher on Thursday on the back of a stronger Wall Street performance overnight as bond yields eased. The benchmark Stoxx 600 index was up 0.13% to 646 at 1057 GMT with most major bourses higher.

Switzerland's SMI rallied to gain 0.13% despite data showing domestic inflation accelerated in August, snapping several months of cooling as renewed military action in the Middle East pushed global energy costs higher. Annual inflation rose to 0.8%, up from 0.4% in July, marking the highest reading since 2024, according to the Federal Statistical Office.

The FSO said the increase was driven by higher prices for petrol, diesel and heating oil, alongside rising housing rentals. Imported goods - including energy - saw a sharp uptick, underscoring the external pressures feeding into Switzerland's inflation profile.

US stocks rebounded slightly after recent losses sent markets to a four-week low, with investors hunting for bargains despite another rise in oil prices, with sentiment boosted by some dovish comments from a Federal Reserve policymaker.

The Dow finished 0.6% higher, while the S&P 500 and Nasdaq both gained 0.5% - with the latter two snapping a three-day losing streak.

Rising oil prices, owing to the latest escalation of conflict between the US and Iran, have pushed up inflation expectations in recent days, leading to a big surge in government borrowing costs in recent days.

Investors remained on edge as tensions in the Middle East escalated, with the US and Iran exchanging their largest barrage of attacks since July.

Renewed hostilities revived fears of a broader regional conflict and kept markets cautious, particularly with energy prices already elevated. Oil prices were up with US West Texas Intermediate 1.75% higher at $92.57 a barrel and Brent jumping 1.53% to $97.07.

Precious metals were higher as investors sought safe havens, sending spot gold up 1.32% to $4,426 an ounce and spot silver up 1.21% to $65.66.

Traders continued to ramp up expectations for another Federal Reserve rate hike, with markets now pricing in roughly a 62% chance of a 25‑basis‑point increase this month, up from 37% a week earlier. The shift reflects persistent inflation concerns and the recent rise in long‑term yields that has unsettled broader market sentiment.

Fed official John Williams said rising long‑term yields largely reflect a solid underlying economy, adding that he was still gathering information ahead of his next policy decision. Attention now turns to Friday's nonfarm payrolls report, after ADP data showed weaker‑than‑expected job gains and kept investors cautious.

On the economics front, private sector activity across the eurozone expanded more or less as expected in August, according to the final reading of the S&P Global composite purchasing managers' index on Thursday, with solid growth across both the services and manufacturing industries.

The final estimate of the composite PMI was revised to 52.0, just 0.1 down from the initial estimate released two weeks ago but in line with July's eight-month high.

Employment increased for the first time in 2026, while pricing pressures remained stable, with easing input cost pressures combined with steady output price inflation.

In equities news, shares in UK house builders fell after Crest Nicholson issued a profit warning on lower sales.

Reporting by Frank Prenesti for Sharecast.com