Europe close: Rising bond yields dent stocks, technology and defensives fall most
The advance in European equities buckled as investors continued to push government bond yields higher on the back of recent more hawkish comments from top officials at various central banks around the world.
At the closing bell, the benchmark Stoxx 600 was down by 1.34% or 5.16 points to 380.66, alongside a drop of 1.76% for the Dax to 12,424.54, a decline for the Cac-40 of 1.88% or 98.55 points to 5,154.35.
In parallel, the yield on the benchmark 10-year German government bond was higher by eight basis points to 0.45% and near its 2016 highs, while those on two-year German notes gained two basis points to close at -0.56%.
Only two sector indices from the Stoxx 600 ended on the up, goosed by that central bank talk, Banks (0.56%) and Basic Resources (0.28%).
At the bottom of the pile were: Food and Beverages (-1.91%), Healthcare (-2.05%), Construction (-2.11%), Personal and Household goods (-2.45%) and Technology (-2.87%).
Somewhat ironically, in the background separate gauges of economic confidence within the single currency bloc published on Thursday revealed sentiment was at its strongest since at least a decade ago.
German consumers were in a slightly more buoyant mood in July, according to consultancy GfK. Its consumer confidence index rose by 0.2 points to 10.6 (consensus: 10.4).
Nonetheless, a subindex of Germans' income expectations contained in that same report was at its loftiest since Reunification in 1991.
In parallel, the European Commission's economic sentiment index jumped from a reading of 109.2 for May to 111.1 in June - its best print since August 2007 - just before the last financial crisis.
"All countries, sectors and pillars of demand are driving the upswing. That makes the upswing all the more resilient. It would probably even weather a hasty withdrawal of monetary accommodation. But this is not to come anyway since the ECB is simply in no hurry to do that despite all the noise in recent days," said Florian Hense at Berenberg.
Harmonised Spanish consumer prices advanced at a 1.6% year-on-year (consensus: 1.5%) pace in June, down four tenths of a percentage point from the prior month.
On the corporate front, on Thursday UBS downgraded its cuts its recommendation for utility stocks from 'overweight' to 'neutral', telling clients that valuations - particularly companies' relative dividend yields - no longer looked attractive and that those shares needed a pause.
Shares in Deutsche Bank were higher, in part after a US federal judge dismissed a lawsuit that accused it of failing in its ant-money laundering controls.
Stock in Hennes & Mauritz advanced 2.74% after the fashion retailer beat analysts' forecasts.
The Brazilian unit of Carrefour filed for an initial public offering that could see it raise between $1.4bn and $1.7bn.