Europe close: Stocks reverse early losses to end on mixed note

(Sharecast News) - European stocks finished on a mixed note on Monday as fears of an escalation of conflict in the Middle East weighed on risk appetite, although traders appeared relieved by the fact that the ground offensive into Gaza had yet to materialise. "Sentiment has stabilised a touch in the afternoon session as yields retreated from their intraday highs, and while the DAX and FTSE100 have struggled, the CAC 40 and FTSEMib have edged into positive territory, making it very mixed session for European stocks," said Michael Hewson, chief market analyst at CMC Markets UK.

The pan-European Stoxx 600 index dipped 0.13% to 433.18 and Madrid's Ibex 35 to 8,995.50.

Other regional indices on the other hand all ended higher with Milan adding 0.74%, Paris up 0.5% and Frankfurt edged up 0.02%.

Yields on the benchmark 10-year German bund meanwhile ended down two basis points at 2.876%, having earlier reached 2.974%.

Front-dated Brent was down 1.8% to $90.36 a barrel on the ICE.

The continued bombing of Gaza by the Israeli government was weighing heavily on investors' minds again, raising concerns that the conflict could spread - ignited further by reports of airstrikes now extending to the West Bank and Israeli forces exchanging fire with Hezbollah along the northern border.

Significantly, overnight 10-year US Treasury yields had edged past the 5.00% mark again, its highest level since 2007, for the second time since Thursday.

Monday's European economic data calendar was relatively quiet, though things were set to pick up with the flash purchasing managers' indices for October due out on Tuesday ahead of the European Central Bank policy meeting on Thursday.

"The ECB is anticipated to keep interest rates unchanged following a series of ten consecutive rate hikes and maintain a subtle tightening bias at the upcoming Thursday meeting. Unless any unexpected developments occur, this meeting is likely to be uneventful," said Patrick Munnelly of Tickmill Group.

Volkswagen in reverse

Shares in German auto giant Volkswagen Group reached their lowest point since April 2020 on Monday after it announced a downward revision in its profit margin outlook for the current year, due to adverse impacts stemming from raw materials hedges. The company is expected to published its third-quarter results on Thursday. Shares were down 3% on the day at €112.70.

Swiss drug giant Roche was edging lower on the news it has agreed to buy Telavant Holdings from Pfizer and Roivant Sciences in a $7.1bn deal. The acquisition will give Roche access to RVT-3101, a novel antibody developed by Telavant as a potential treatment for inflammatory bowel diseases such as ulcerative colitis and Crohn's disease.

Shares in Adevinta plunged 10% after reports overnight that private equity firms Blackstone and Permira were reconsidering plans to buy the Norway-based classified advertising company.