UPDATE 2-European shares end lower on tech losses as bond yields weigh

  • Reuters
  • Stock Market News
UPDATE 2-European shares end lower on tech losses as bond yields weigh
Credit: © Reuters.

* Tech stocks lead declines for a second day

* Total gains on stake sale of wind and solar farms

* High treasury yields in focus

* Bank stocks gain (Updates to market close)

By Shashank Nayar and Ambar Warrick

Feb 23 (Reuters) - European shares ended lower on Tuesday as high sovereign bond yields pressured heavyweight sectors such as technology, while a batch of mixed corporate earnings cast doubt over the pace of a post-COVID-19 recovery.

The benchmark euro zone stock index .STOXX was down 0.4%, with tech stocks .SX8P leading declines for a second straight session as they retreated further from 20-year highs.

A recent spike in sovereign bond yields also weighed on stocks, as higher returns in fixed income offered investors a safer alternative to relatively riskier equities.

Technology stocks in particular have also been viewed as expensive by investors after their outperformance through the COVID-19 pandemic.

Still, bank stocks .SX7P benefited from the rise in borrowing rates, with Spain's bank-heavy index .IBEX adding 1.7%.

"Investors are cautiously optimistic about the rise in U.S. bond yields and what that tells us about inflation trajectories, while German shares seem to be weighing on the wider European market as tech stocks weaken further with the DAX being a tech-focussed index," said Michael Hewson, an analyst at CMC Markets.

Core European government bond yields rose despite indications of discomfort from European Central Bank President Christine Lagarde with the recent surge in yields. GVD/EUR U.S. yields retreated slightly after U.S. Federal Reserve Chair Jerome Powell downplayed concerns over inflationary pressures and reiterated continued monetary support. stocks have rallied sharply off pandemic-driven lows hit last year, but have been unable to reach pre-COVID highs on doubts over a euro zone economic recovery due to fresh lockdowns in major countries.

Among individual movers, HSBC Holdings HSBA.L dropped 0.8% after its annual profits fell sharply due to the pandemic, while it unveiled a revised strategy focused mainly on wealth management in Asia. packaging firm SIG Combibloc Group SIGNC.S bottomed out the STOXX 600 after its annual core earnings missed estimates. health care group Fresenius FREG.DE slipped after it narrowed its 2021 sales growth forecast and said it would launch a cost-cutting program, while cement-maker HeidelbergCement HEIG.DE dropped 2.3% even after preliminary results showed core profit was up 6% last year. energy group Total TOTF.PA gained more than 2% after it agreed to sell stakes in some wind and solar farms to Credit Agricole Assurances CAGR.PA and Banque des Territoires.

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