European shares lower as yields rise

The pan-European STOXX 600 index ended down 0.1% after closing out the previous week flat

European shares closed lower on Monday, as government bond yields across the continent climbed on lower expectations about imminent interest rate cuts by major central banks, eclipsing gains brought by some upbeat corporate reports.

The pan-European STOXX 600 index ended down 0.1% after closing out the previous week flat.

The yield on the German government bond, considered the region's benchmark, continued its rise and was last at 2.318% as the latest data after a robust U.S. jobs data poured cold water on hopes of an early rate cut in the world's biggest economy.

Sentiment remained subdued on Monday as Fed Chair Jerome Powell, in an interview aired on Sunday, said the U.S. central bank can be "prudent" in deciding when to cut its benchmark overnight interest rate.

Although reductions will come, they are likely to be at half the pace the market is forecasting this year, with just three plotted by policymakers, said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

This is a message he (Powell) has kept drumming home, and clearly feels confident to reinforce it given the buoyant jobs report on Friday, Streeter added.

Adding to the concerns about interest rates remaining higher for longer, HCOB's composite PMI for the bloc, compiled by S&P Global, suggested the euro zone economy showed tentative signs of recovery in January.

Shares of European miners declined 1.7% as most metal prices dropped on a stronger dollar, while retail shares slipped 2.2%.

Spain's main stock market index was the worst hit among European bourses, down 1.2%.

Nordea declined 5.0% after the Nordic bank missed fourth-quarter operating profit estimates.

UniCredit, on the other hand, climbed 8.1%, hitting its highest share price in over eight years after the Italian lender reported fourth-quarter results above expectations and said it would boost shareholder returns.