European stocks muted as bond selloff continues; Reckitt jumps

European shares were little changed on Tuesday as a renewed bonds selloff weighed on markets, while positive corporate updates limited losses.

The pan-European STOXX 600 was up 0.04% at 651.35 points by 0729 GMT.

Britain’s FTSE 100 fell 0.4% as trading resumed after Monday’s bank holiday.

Germany’s DAX slipped 0.2%, while France’s CAC 40 gained 0.4%.

Global bond yields hit major new highs on Tuesday as renewed fighting in the Middle East lifted oil prices and investors worried about inflation and braced for a slew of interest rate hikes.

Germany’s 30-year government bond yield rose to a fresh 15-year high, while France’s 30-year yield climbed anew to touch its highest since 2008.

A prolonged fighting in the Middle East that has driven up energy prices as well as hawkish remarks from Federal Reserve Chair Kevin Warsh last week has prompted investors to price in interest rate hikes.

Traders largely expect the European Central Bank to hike rates in September, LSEG data showed.

Euro zone inflation figures for August, which could offer fresh clues on the interest rate trajectory, are expected later in the day.

Energy stocks rose 1.4%,as Brent crude traded around $92 a barrel. Reckitt Benckiser Group added 5.2% after a jury favoured the company in its trial over claims the company failed to warn that its products for premature babies could cause a deadly bowel disease.

Shares of Air Liquide climbed 3.8% after media reports said activist investor Elliott Investment Management has built a stake in the French multinational company.