European shares higher as bond market cools

The Stoxx 600 jumped 0.61% to 550.09 points at the close, with gains led by the media and telecommunication indexes, up nearly 1.9% each

 European shares closed higher on Thursday as easing pressures on bond market supported the main index.

The pan-European Stoxx 600 jumped 0.61% to 550.09 points at the close, with gains led by the media and telecommunication indexes, up nearly 1.9% each.

European markets calmed after risks tied to debt-driven fiscal spending in developed economies had triggered an equity market selloff earlier this week.

With the yields having calmed down today, perhaps again, there’s a sense that this bit of an early autumn, late summer panic seems to have subsided just a little bit,” said Chris Beauchamp, chief market analyst at IG Group.

Euro zone bond yields cooled, with German 30-year bond yield down to 3.3439%. Its French counterpart eased to 4.402% after hitting its highest since June 2009 on worries that its government could collapse again.

Investor sentiment will be further tested as French Prime Minister François Bayrou faces a vote of confidence next week amid concerns that his minority government may topple after it pushed for a budget squeeze in 2026.

And only if one of those worst-case outcomes in terms of political turmoils and new presidential elections happens, that will be a catalyst for more volatility, said Bas van Geffen, quantitative analyst at Rabobank.

But barring that, the market is preparing for a new PM and potentially a sort of watered-down budget consolidation, van Geffen added.

CAC 40 index closed 0.3% lower. September is also historically a tough period for markets.

China-exposed luxury stocks were a drag, with fashion giants Burberry, Christian Dior and LVMH falling between 2.8% and 4.2%, as Chinese bourses tumbled overnight on reports that Beijing wanted to cool a strong stocks rally.

Declines weighed on the European luxury index, losing 1.24% to lead the sectoral losses.