European Markets Stumble Amid Rising Bond Yields and Trade Concerns

European shares declined as bond yields surged due to adjusted interest rate expectations. Concerns about proposed tariffs by President Trump added to market unease. UK midcaps and France's CAC 40 led declines, while economic data showed mixed results in Europe, affecting government finances and inflation predictions.

European shares faced a downturn on Wednesday, with the pan-European STOXX 600 index falling by 0.2%. This slump was prompted by a rise in bond yields, resulting from investors pricing in fewer interest rate cuts in both Europe and the U.S. this year.

In Europe, yields on government bonds, including those on Germany's 10-year notes, increased sharply, reflecting a similar trend in U.S. Treasury yields. British government bonds were particularly affected, pushing the 30-year yields to a 26-year high, creating added strain on government finances.

President Trump's consideration of a national economic emergency to justify new tariffs also unsettled markets. Analyst Danni Hewson noted the potential for increased inflation in both the U.S. and Europe, while specific sectors like retail and energy mirrored broader market trends with notable investor reactions.

(With inputs from agencies.)