European equities ended mixed on Thursday as the EuroStoxx 50 extended its recent decline, weighed by rising sovereign bond yields and higher oil prices. The regional benchmark closed 0.35% lower at 6,422.06 points, reflecting cautious investor sentiment amid tighter financial conditions.
The FTSE 100 in London eked out a modest gain of 0.04%, ending at 10,748.16 points, just below its intraday high. Switzerland's SMI, however, pared losses to 0.13% at 14,368.16 points after a late-session rebound driven by news of a Swiss-China free trade agreement. The deal supported export-linked stocks, with Swatch surging 1.3% as the watchmaker's Swiss production underpinned its appeal.
U.S. Treasury yields resumed their climb on Thursday, erasing earlier support from the Treasury's announcement of expanded long-dated bond buybacks. Analysts noted the purchases improved market mechanics but did little to address debt sustainability; U.S. federal debt surpassed $40 trillion for the first time this week. The rise in yields weighed on rate-sensitive sectors across Europe.
Oil prices advanced as geopolitical tensions between the U.S. and Iran escalated, with President Donald Trump threatening economic retaliation. Brent crude futures approached recent highs, benefiting integrated energy majors: Eni gained 2.6% and BP added 2.4%.
Retail stocks lagged after JD Sports slashed its fiscal 2026/27 earnings guidance by more than 14%, citing weak second-quarter sales. The news followed a similar downgrade from Swiss rival On Holding in mid-August, pressuring apparel peers. Adidas fell 3.1% within the EuroStoxx 50, while Ahold Delhaize declined 1.9% after Walmart's U.S. quarterly miss added to sector headwinds.
In contrast, Michelin advanced 1.1% after JPMorgan upgraded its rating to Overweight, citing stronger demand for truck replacement tires and structural growth in high-tech composites. The upgrade underscored pockets of resilience in cyclical industries despite broader macro pressures.
