Europe open: Inflation, bond yield fears dampen sentiment

European shares fell at the opening on Monday as caution over rising bond yields, and inflation overshadowed optimism of an economic recovery as Covid vaccine rollouts gathered pace.

The pan-European STOXX 600 index was down 1.15% at 0914 GMT with all major regional bourses lower.

Britain’s FTSE 100 was 0.96% lower as the government prepared to release details of its planned path out of Covid-19 lockdowns.

Weekend reports suggested schools would re-open from March 8, while people will be able to meet outside in groups of six from March 29, just in time for Easter.

"Those steps have been prioritised ahead of the re-opening of restaurants and non-essential retail, which will not occur until April (daily covid-19 numbers permitting),” said Spreadex analyst Connor Campbell.

“This delay to the retail re-opening helps explain why the FTSE and pound have both opened the week in the red. For while investors are no doubt happy the country is loosening the restrictions once again, the reality is they don’t hold positions in schools and picnics.”

Investors were also eyeing a speech from European Central Bank President Christine Lagarde’s on stability, economic co-ordination and governance in the EU later in the day.

In equity news, shares in security firm G4S fell 9.81% as Canada’s GardaWorld declared its improved 235p-per-share offer as final.

The announcement disappointed investors looking for a better deal than the 245p-a-share offer from rival Allied Universal which was accepted by the G4S board last year.

“G4S has been a business that has seen its fair share of problems over the past three years, its share price down sharply from the record highs seen back in July 2017,” said CMC Markets analyst Michael Hewson.

“Last year the company reported a £91m loss after writing down the value of its cash handling business, and has also been involved in a number of incidents that have damaged its credibility. The shareholder hold-outs need to accept that they are unlikely to wring any more out of this particular bid, and accept the money on the table now, with the shares falling back sharply in early trade.”