Europe open: Shares up in cautious start as investors eye Middle East crisis

European shares opened cautiously higher on Monday as traders kept a close watch on the war in the Middle East between Israel and the Palestinian militant group Hamas, while weaker Asian markets also hampered sentiment.

The pan-European Stoxx 600 index was up 0.6% at 434 in early deals, with major regional bourses mixed. In Asia, China’s Shanghai Composite fell 1.47% on continuing worries over the country’s struggling property sector and high youth unemployment.

US markets also fell overnight as treasury yields rose in response to the Middle East crisis.

“Escalating tensions in the Middle East and Treasury yields topping 5% for the first time since just prior to the great financial crisis are currently burdens which equity markets are finding difficult to bear,” said Interactive Investor head of markets Richard Hunter.

“The ongoing strength of the latter also impacts on the broader economy as it is seen as a benchmark for borrowing levels. As such, both businesses and individuals are impacted and indeed the 30-year mortgage rate in the US reached 8% last week, to levels not seen this century.”

“Quite apart from the factors which have been weighing on US markets, Chinese stocks have also come under increasing selling pressure. International investors have been leaving the region given the toxic mix of a beleaguered property sector, ailing consumer sentiment, high youth unemployment and rising geopolitical tensions.”

However, there was some respite on the commodities front, with oil prices down more than $1 as diplomatic efforts to stop the Israel-Hamas conflict escalating further eased worries about supplies of crude.

In equity news, shares in Adevinta plunged 10% after reports overnight that private equity firms Blackstone and Permira were reconsidering plans to buy the Norway-based classified advertising company.

Reporting by Frank Prenesti for Sharecast.com