European equities extended declines on Thursday, with the Stoxx Europe 600 Index falling to its lowest level since August 3 as bond yields surged and central banks maintained restrictive monetary policy stances.
The broad European benchmark slipped 0.5%, marking its seventh consecutive daily decline—the longest losing streak since September 2023. Germany’s DAX dropped 0.8%, France’s CAC 40 eased 0.5%, and the UK’s FTSE 100 also declined 0.5%. The declines followed a sharp rebound in bond yields, with the U.S. 30-year Treasury yield hitting a 19-year high of 5.337% and Germany’s 10-year Bund yield approaching 2011 peaks.
The Federal Reserve’s hawkish rhetoric continued to weigh on risk sentiment, despite the U.S. Treasury unexpectedly doubling its liquidity-support buyback cap for long-dated nominal debt to at least $4 billion per operation on Wednesday. The move, intended to stabilize markets, did little to offset broader concerns over sustained high borrowing costs amid persistent inflation pressures.
Among individual movers, Danish biosolutions firm Novonesis AS surged as much as 9% following strong earnings, while Dutch consulting group Arcadis NV gained 1%. Dutch engineering company WSP Global also advanced. In contrast, Dutch insurer Aegon Ltd. fell 4% after reporting weaker-than-expected results.
UBS analysts advised investors to view recent volatility as an opportunity to reassess portfolio diversification and deploy excess cash. They highlighted the role of high-quality fixed income in mitigating downside risks amid potential growth slowdowns. The analysts noted that elevated yield levels could strengthen portfolio resilience if economic conditions deteriorate faster than anticipated.
Geopolitical tensions added to market unease, with U.S. President Donald Trump warning of severe economic consequences for any nation providing support to Iran.
