Europe shares rise as bond selloff cools

The continent-wide STOXX 600 index ended 0.65% higher at 546.72 points

European shares closed higher on Wednesday, stabilising as investors assessed fiscal challenges after a selloff in longer-dated bonds had sparked risk-off sentiment in the previous session.

The continent-wide STOXX 600 index ended 0.65% higher at 546.72 points, boosted by healthcare stocks such as Roche Holdings and AstraZeneca.

Basic resources also extended support by gaining 1.5%, influenced by a jump in copper prices.

The day’s moves follow the STOXX 600’s biggest one-day loss in a month on Tuesday, driven by a multiyear jump in bond yields amid mounting concerns about fiscal pressures in some economies.

France’s 30-year yield declined nearly 5 bps to 4.4547% after reaching a 16-year high on Tuesday, but caution prevailed amid political worries as Prime Minister Francois Bayrou’s government braces for a no-confidence motion next week.

Losing the key vote could collapse Bayrou’s minority coalition government and push France into deeper political and fiscal uncertainty.

The developments were triggered by the prime minister’s pushing through of unpopular plans for a budget squeeze in 2026.

Long-dated bond yields in Germany and Italy also settled down after the previous day’s spike.

What we see today is maybe a small correction on the poor performance that we have seen yesterday. Bonds have stabilized now, but of course the risks have not disappeared, said Teeuwe Mevissen, senior market economist at Rabobank.

On the data front, a private survey showed the euro zone economy kept expanding at a snail’s pace in August, as weaker services growth offset improved manufacturing output.

German services sector activity declined slightly in August after a marginal expansion in July, as new business shrank again, a survey showed.