Europe midday: Stocks steady as bond selling abates

Stocks across Europe were slightly higher on Wednesday amid a pause in recent selling in government bonds on either side of the Atlantic.

That was despite news overnight of the ouster of the speaker of the U.S. House of Representatives, the first time that had occurred in the country's history.

The Stoxx 600 index was up 0.30% to 442.07, alongside a gain of 0.3% to 15,132.57 for the German Dax while the FTSE Mib was up by 0.1% to 27,509.67.

In parallel, the yield on the benchmark 10-year Bund was down by two basis points at 2.949% and euro/dollar was ahead by 0.42% to 1.0510.

Brent crude oil futures were also lower, slipping 1.77% to $89.31 a barrel on the ICE.

"The [recent] moves [in bonds] have been driven by forecasts for higher for longer interest rates and strong US economic data that could embolden the Fed to carry out further tightening. All eyes are on Friday’s labour market figures with a strong US jobs report likely to exacerbate the market’s nervousness," said Victoria Scholar, head of investment at Interactive Investor.

Meanwhile, Neil Wilson, analyst at Markets.com, reckons we're seeing a "paradigm shift" in the bond market. "Central banks are no longer buying bonds, they are selling them. This is a mechanistic explanation but simple and true – someone else has to buy the debt and there is a lot more of it now. This can only result in lower prices, higher yields. The great bond bull market is dead, a new bear market is taking over."

In European economic data on Wednesday, service-sector purchasing managers' indices (PMIs) across the Eurozone showed improvement in September, with the majority beating market expectations.

Notably, PMIs in both Spain and Germany returned to positive territory (above the 50-point level), showing that service-sector activity actually increased last month. Services PMIs in France and Italy still remain under 50.

In company news, UK retail giant Tesco beat expectations with its interim results as it lifted its profit guidance for the full year, as it managed to take advantage of easing consumer price inflation at the till.