European stocks dropped on Monday with Germany's benchmark index falling 10 percent from its April peak. German bond yields rise again.
The
rise in Germany's 10-year Bund yields since mid-April has made them a central
driver of global markets and they gained 4 basis points in the first
hour of trade in Europe, hurting stock markets.
Higher yields on bonds make stocks, which reached 8-year highs in April just before Bunds started to move, less attractive, drawing more money back into the bond market. However, if signs of improved economic growth are one driver of that move, that should help share values, says Reuters.
The Stoxx Europe 600 Index lost 0.3 percent to 387.66 at 11:25 a.m. in
London, after earlier sliding as much as 0.5 percent.
Germany’s DAX Index dropped 0.5 percent, even as Deutsche Bank AG rose 5.9 percent after saying John Cryan will replace co-Chief Executive Officer Anshu Jain. Cryan will become sole CEO when Juergen Fitschen steps down next May.
The DAX decline was led by Continental AG, E.ON SE and ThyssenKrupp AG.
Portugal’s PSI 20 Index fell 1.6 percent, the most among western-European markets.
The Stoxx 600 tumbled more than 6 percent from its April high
through Friday amid increased worries over Greece.
Negotiations between Athens and its creditors are resuming in Brussels as Group
of Seven leaders call for action to end
the standoff and avert the risk of wider economic reverberations.
Greece’s ASE Index climbed 0.4 percent on Monday after a 4.8 percent drop last week.
Meanwhile, Turkey's main stock index plunged 6 percent and the lira hit an all-time low after the ruling AK Party failed to win a majority in parliamentary elections. The pro-Kurdish Peoples’ Democracy Party, or HDP, passed the 10 percent threshold of the national vote needed to win seats in parliament, raising a prospect for the two parties to create a coalition and also a possibility of conflict with President Recep Tayyip Erdogan.
Meanwhile, U.S. stock markets were expected to open flat to a touch lower.
