Europe close: Stocks hit lowest since June on bond sell-off, oil prices

(Sharecast News) - European stocks dropped sharply on Thursday, falling to their lowest level in nearly four months, as surging oil prices and bond yields dented demand for equities worldwide. The Stoxx Europe 600 finished 1.3% lower at 626.65, with all major indices falling 1% or more. This was the lowest closing price since 11 June.

In bond markets, the 10-year French bond yield jumped to its highest level since 2002 as the government prepared to unveil its 2027 budget later in the session. Elsewhere, the 10-year US Treasury yield hit its highest since 2002 while the 30-year UK Gilt yield hit 6% for the first time since 1998,

"A sharp sell-off in US Treasuries, fuelled by expectations of tighter monetary policy amid persistent inflation and robust economic growth, drives global yields higher at the start of Q4, with US, German and Japanese borrowing costs reaching multi-decade highs ahead of Friday's US employment report," said Axel Rudolph, chief technical analyst at IG.

Front-month Brent crude futures were up 3.8% at $101.74 a barrel by the close on the back of reports China had suspended some oil products exports for delivery this month.

"While bond markets are pricing in stronger growth across the developed world, there is also the realisation that there is now a structural premium attached to the oil price and to refined products," said XTB research director Kathleen Brooks. "This will keep prices elevated for the long term, as it does not appear that a neat diplomatic solution to the war in the Middle East will be reached any time soon."

In economic news, the S&P Global eurozone manufacturing PMI came in at 52.9, up from August's 52.7 and confounding expectations for no change. Fuelling the rises was a spike in new orders, which rose at the fastest pace since March 2022.

Meanwhile, the seasonally adjusted eurozone unemployment rate was 6.4% in August, unchanged from July, according to Eurostat. While this was up from 6.3% in August 2025, joblessness remains close to the record-low level of 6.2%.

In equity news, Zealand Pharma shares plunged after German partner Boehringer Ingelheim reported results from a late-stage clinical trial of an obesity drug candidate licensed from the Danish biotech that showed nearly 20% of patients dropped out.

Oil producers were bucking the trend to track oil prices higher, including heavyweights BP, Shell, Repsol, Eni and Equinor.

Banking stocks were mostly lower across the board, with UK peers HSBC, NatWest, Lloyds and Barclays falling sharply in London, along with Commerzbank in Frankfurt and BNP Paribas in Paris.

Capgemini was a high riser as sentiment surrounding the consultancy firm was lifted by forecast-beating results from American outfit Accenture. Europe-listed peers Sopra Steria, Reply and Tieto also rose after Accenture delivered a bullish outlook for the coming year, quashing concerns about AI disruption on the industry.