European Markets Shaken Amid Rising Bond Yields and Tariff Concerns

European shares declined as government bond yields rose to significant highs. Reportedly, President-elect Trump is contemplating declaring a national economic emergency for tariff implementation. This has caused market uncertainties across Europe, impacting sectors like automobiles, luxury goods, and utilities, while healthcare saw marginal gains.

European shares experienced a downturn on Wednesday, retracting early gains as government bond yields surged to multi-month highs. This market movement followed news reports suggesting that U.S. President-elect Donald Trump might declare a national economic emergency, enabling him to impose universal tariffs.

The pan-European STOXX 600 index lost 0.5% by midday, with many local stock exchanges also recording losses. German bonds, a regional benchmark, saw yields reach their highest in six months, echoing trends in U.S. Treasuries. Financial analysts have expressed concerns that terms like 'economic emergency' could destabilize markets.

The potential tariffs are predicted to strain Europe and the global economy, fueling trade tensions and potentially causing inflation in both the U.S. and Europe. UK's 10-year gilt saw a notable increase, with yield levels rising to heights not seen since 2008. As a result, several economic sectors endured losses, though healthcare managed slight growth.

(With inputs from agencies.)