UKX FTSE 100 Index

By William Watts, MarketWatch

European equities put in a mixed performance Tuesday as investors fretted over bond yields, with those in Italy and the U.S. resuming their climb.

What are major indexes doing?

The pan-European STOXX 600 was down 0.1% at 371.98.

In London, the FTSE 100 dropped 0.1% to 7,223.22, while in Paris, the CAC 40 stock index was little changed at 5,302.31 and Germany's DAX was marginaly lower at 11,944.25.

European stocks fell sharply on Monday, with Italy's FTSE MIB index dropping more than 2% as Italian bond yields soared and the spread between Italian and German bond yields widened, putting heavy pressure on bank shares. On Tuesday, the Italian benchmark index was up 0.8% to 20,012.86.

Read:Here's why investors remain uneasy about Italy's banks and the 'doom loop' (http://www.marketwatch.com/story/heres-why-investors-remain-uneasy-about-italys-banks-and-the-doom-loop-2018-10-08)

What's driving markets

Nervous investors continue to keep an eye on rising global bond yields. The yield on the 10-year U.S. Treasury note briefly pushed to a new seven-year high (http://www.marketwatch.com/story/10-year-treasury-yield-nudges-to-seven-year-high-above-325-2018-10-09) Tuesday above 3.25% after U.S. bond markets were closed Monday for a holiday. In recent action, the 10-year yield was hovering at 3.216%. Yields and debt prices move in opposite directions.

Italy had appeared to stabilize somewhat in early action. The yield on the 10-year government bond subsequently climbed 0.8% to 3.592%, however, and the closely watched spread between the Italian bond and its German counterpart widened further.

The mixd tone in Europe came as U.S. stocks traded mostly lower (http://www.marketwatch.com/story/stock-futures-drop-sp-on-track-for-4th-straight-decline-as-bond-yields-rise-2018-10-09) in early action, and Asian markets steadied (http://www.marketwatch.com/story/nikkei-slips-but-chinese-stocks-bounce-back-after-mondays-plunge-2018-10-08). Chinese equities were mixed a day after selling off sharply as traders returned from a weeklong holiday.

What are analysts saying

Worries over global growth and emerging-market worries as U.S.-China trade tensions continue to overhang markets, said Naeem Aslam, chief market analyst at Think Markets UK, in a note, citing, among several factors, the International Monetary Fund's decision Monday to cut its global growth forecast (http://www.marketwatch.com/story/imf-downbeat-on-global-economic-outlook-2018-10-08) for this year and next.

"Clearly, there is a risk and the new outlook suggests fatigue is setting in and the mounting weakness in the emerging market could further dampen the outlook," he said. " The risk to global outlook have increased significantly in the past three months and there is no clear solution when the ongoing trade war between the U.S. and China will settle."

What stocks are moving

Among the positive sectors, oil stocks rose as crude prices bounced back from the previous day's weakness, though not buy much. Total SA (TOT) rose 0.7%, while shares of BP (BP.LN) rose 0.4%

Drug stocks were proving the biggest drag on the European index, with Roche Holding Ltd. (ROG.EB) down 0.7% and Novozymes AS down over 2%.

Shares of Airbus SE (AIR.FR) declined 1.4%. a day after the company tapped the head of its plane-making unit, Guillaume Faury, to succeed Tom Enders as chief executive in April, pending shareholder approval.

Shares of Sage Group PLC (SGE.LN) shed 1.7% in London after Barclays cut the software group to underweight.

-- Barbara Kollmeyer contributed to this report

(END) Dow Jones Newswires

October 09, 2018 10:07 ET (14:07 GMT)

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