Europe: Stocks hit third straight weekly loss as yields surge

EUROPEAN shares advanced at the end of a turbulent week tracking Wall Street gains, but hit weekly losses, while a hotter-than-expected US jobs report indicated interest rates might remain elevated for longer pushing bond yields higher.

The pan-European Stoxx 600 index rose 0.8 per cent on Friday with Wall-Street indexes also rising. But the benchmark Stoxx index declined for the third consecutive week.

The index hit a six-month low earlier this week as the US and European bond yields surged to multi-year highs on robust US data and on expectations that borrowing costs will remain higher for a longer period.

Data showed US nonfarm payrolls increased by 336,000 jobs last month and was almost double the 170,000 forecast of economists polled by Reuters.

Benchmark 10-year US Treasury yields hit 16-year highs, while euro zone bond yields edged higher after US jobs data.

“The Labour report reinforced the conviction by investors that maybe higher for longer is not fully priced in yet, so bond yields have moved higher, weighing on performance,” said Andrea Cicione, head of research at TS Lombard.

Most major European sub-sectors ended higher.

Leading gains retailers rose 2.3 per cent boosted by a more than 6 per cent jump in Zalando as investors rushed to buy the stocks at lower prices in hope of resilient third-quarter results amid a weak retail sector.

Tech stocks gained nearly 2 per cent mirroring Wall-Street sentiment.

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But the food and beverage index fell 1.8 per cent, with shares of food companies Nestle down more than 2 per cent as investors weighed the potential impact of Novo Nordisk’s blockbuster weight-losing drug Wegovy and how it could reduce spending on food.

Nestle declined to comment on the stock performance. Peers Danone and Unilever were also down, 1.2 per cent and 2.6 per cent lower respectively.

Shell expects integrated gas trading and optimisation in third-quarter to be higher compared to previous quarter. Shares of the oil giant was up about 2 per cent.

While Goldman Sachs sees continued strong earnings performance for European oil companies ahead of third-quarter results.

Shares of Aviva, one of Britain’s largest insurers, surged 5.3 per cent after Britain’s Times newspaper cited talks of a possible takeover by a foreign buyer.

Aviva declined to comment when contacted by Reuters.

Also, Aviva is among a small handful of insurers exploring bids for the UK consumer operations of rival RSA, two people familiar with the matter told Reuters.

Adyen gained 4.3 per cent after TD Cowen started coverage of the Dutch payment services provider with a “market perform” rating.

Amsterdam-based healthcare technology company Philips tumbled 6.9 per cent after the US Food and Drug Administration said it remains unsatisfied with the status of a product recall. REUTERS