European Stocks Slip Amid Rising Bond Yields

European stocks fell on Monday as high government bond yields led investors to withdraw from equities. The STOXX 600 index dropped 0.3%, with technology and industrial goods sectors experiencing the most declines. Trading volumes were low ahead of the New Year holiday, with several markets closed or having reduced hours.

European stocks edged lower on Monday, as heightened government bond yields prompted a pullout from equities, concluding a year that showed mixed outcomes for regional markets. The STOXX 600 index decreased by 0.3% by late morning, with technology and industrial sectors leading the decline.

Trading volumes were notably thin ahead of the New Year holiday mid-week. German, Italian, and Swiss markets are closed on Tuesday, while UK and French markets are operating on shortened schedules. The 10-year German bund yield reached its highest level since mid-November, in response to rising U.S. Treasury yields and uncertainty surrounding next year's monetary policies.

Despite fluctuations, the STOXX 600 remains on track for a 5.9% annual increase, though it trails behind the S&P 500's impressive 25% surge driven by Federal Reserve rate cuts and AI trade booms. The German DAX showed a 19% annual gain, while France's CAC 40 prepared for a 2.5% decline due to fiscal and political challenges.

(With inputs from agencies.)