European stock markets moved lower on Thursday as rising government bond yields and a sharp increase in crude oil prices renewed concerns about inflation and the outlook for interest rates.
Brent crude futures climbed above $104 a barrel following reports that the White House had requested military strike options against Iran from the Pentagon, potentially for implementation before the US midterm elections.
The reports intensified concerns about a possible escalation in tensions between Washington and Tehran, raising fears of disruptions to energy supplies.
Meanwhile, US Treasury yields approached multi-decade highs after minutes from the Federal Reserve’s September monetary policy meeting indicated unanimous support for another interest rate increase before the end of 2026.
The yield on the benchmark 10-year Treasury note approached 5.32%, while the 30-year yield traded near 5.71%.
The combination of higher borrowing costs and rising energy prices weighed on investor sentiment across European equity markets.
German Exports Decline as European Markets Retreat
European shares also came under pressure following weaker-than-expected German trade figures.
Data released by Germany’s Federal Statistical Office, Destatis, showed that exports unexpectedly fell by 0.8% in August compared with the previous month, following a 0.5% decline in July.
Imports increased by 0.9% during August, reversing a 5.5% contraction recorded in July.
The figures added to concerns about the outlook for Europe’s largest economy amid elevated financing costs and uncertainty surrounding global trade.
Germany’s DAX Index declined 0.9%, while France’s CAC 40 fell 0.4%. In London, the FTSE 100 slipped 0.1%.
Banking stocks were among the weaker performers as eurozone government bond yields climbed towards their recent highs.
Shares in Commerzbank, BNP Paribas and Lloyds Bank declined as investors assessed the implications of higher yields and persistent inflationary pressures.
Argenx, Bayer and Vodafone Decline
Among individual companies, Argenx (NASDAQ:ARGX) recorded a sharp fall after announcing the discontinuation of its Phase 3 UNITY clinical trial.
The Belgian-Dutch immunology specialist said it had stopped the study evaluating efgartigimod SC in adults with moderate-to-severe Sjögren’s disease.
The announcement weighed heavily on the company’s shares as investors considered the implications for its clinical development programme.
Bayer (TG:BAYN) also traded lower despite announcing that the US Food and Drug Administration had accepted its supplemental New Drug Application for KERENDIA.
The German pharmaceutical and biotechnology group’s shares declined amid broader market weakness.
Vodafone (LSE:VOD) also moved lower after increasing its cost-saving target for its merged UK telecommunications business.
Energy Shares Advance as Brent Crude Climbs Nearly 4%
Energy companies were among the stronger performers as crude oil prices rose sharply.
BP (LSE:BP.), Shell (LSE:SHEL) and TotalEnergies (EU:TTE) advanced as Brent crude gained nearly 4%, supported by concerns about a potential escalation of the conflict involving the United States and Iran.
The rise in oil prices followed reports that US officials were considering possible military options against Iran.
Investors assessed the potential consequences for global crude supplies, particularly given the importance of Middle Eastern energy production and transportation routes.
The increase in oil prices provided support for major European energy producers, even as it contributed to wider concerns about inflation and interest rates.
Tesco and Imperial Brands Gain on Corporate Updates
Several UK-listed companies advanced following announcements concerning their financial outlooks and capital allocation plans.
Tesco (LSE:TSCO) rose after the supermarket group issued a slightly improved profit forecast and increased the size of its share buyback programme.
The announcement provided support for the retailer’s shares despite the broader decline in European equities.
Imperial Brands (LSE:IMB) also gained after reaffirming its full-year financial guidance and announcing plans to repurchase £1.5 billion of its shares during fiscal 2027.
Elsewhere, Edinburgh-based investment company Aberdeen (LSE:ABDN) advanced after announcing plans to reduce its holding in insurer Standard Life (LSE:SDLF).
Aberdeen intends to lower its stake from 10.3% to 5.2%, while Standard Life shares declined following the announcement.
Danish biotechnology company Bavarian Nordic (TG:BV3) also recorded strong gains after raising its full-year financial guidance.
Overall, European markets remained under pressure from rising bond yields, higher oil prices and weaker economic indicators, although company-specific developments supported selected stocks.
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