European shares slip as rising oil, bond yield weigh; Trump-Xi talks eyed

EUROPEAN shares closed lower on Thursday (Sep 24) as oil prices resumed their rise on faltering hopes of US-Iran negotiations, keeping euro zone bond yields near multi-year highs and denting risk appetite.

The pan-European Stoxx 600 ended 0.55 per cent lower at 636.43. Most regional bourses were also in negative territory.

Iranian officials communicated with US envoys on the sidelines of the UN General Assembly, but both sides signalled little progress toward ending the conflict.

“I wouldn’t hold my breath for any quick resolution to the Middle East standoff. Both parties are quite intransigent, and their differences are irreconcilable,” said Yasser El-Shimy, senior investment analyst at the Motley Fool.

Oil prices rose for a second day after falling for five sessions, with Brent crude holding above the key US$100-per-barrel level.

European energy shares were the top gainers, up 1.1 per cent. Consumer-facing food and beverages and personal and household goods saw modest gains of 0.7 per cent and 0.2 per cent, respectively.

Healthcare stocks, considered traditionally defensive, were down slightly relative to peers.

Germany’s 10-year government bond yield, the benchmark for the euro zone, was steady at 3.611 per cent, just below a 17-year high reached last week as elevated oil prices strengthened the case for further monetary tightening from the European Central Bank.

ECB board member Isabel Schnabel resigned to take on a senior role at the International Monetary Fund, kicking off a reshuffle at the central bank.

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“It’s not simply what’s happening in the oil market. Bond investors have also got the hump over high levels of government borrowing, persistent deficits, and a heavy pipeline of new bond issuance,” said Dan Coatsworth, head of markets at AJ Bell.

“(Still), we’re seeing minor pullbacks as equity investors remain comforted by decent corporate earnings growth.”

Hopes for progress at Trump-Xi talks

Investors are hoping for some progress from a Washington summit between US President Donald Trump and Chinese President Xi Jinping. US Treasury Secretary Scott Bessent said the two countries had agreed to extend their trade truce to Jan 10.

The two leaders are expected to speak on a raft of issues, from Taiwan and Iran to concerns over AI.

Back in Europe, technology shares were among the biggest sectoral decliners, down 1.6 per cent. Industrial goods, that house defence stocks, lost 1.4 per cent.

Among individual stocks, Shelly Group gained 4 per cent after Schneider said it intends to launch a 1.2 billion-euro (US$1.4 billion) takeover bid for the Bulgarian smart-device maker.

Vistry shed 3 per cent after the British homebuilder lowered its annual profit expectations amid a strategic overhaul. Britain’s FTSE was a shade lower, at 10,689.83 points.

Shares in H&M fell 2 per cent despite the Swedish fashion retailer reporting a bigger-than-expected rise in June-August operating profit. REUTERS