UPDATE 2-European shares dip as high yields, inflation concerns return to fore

* Commodity-linked sectors rally
* Bond proxies such as utilities, healthcare drop
* European stocks set for record highs in 2021 - poll
* AB InBev, Bayer slide as earnings disappoint

(Updates to market close)
By Sagarika Jaisinghani and Ambar Warrick
Feb 25 (Reuters) - European shares ended lower on Thursday,
as higher bond yields and volatility in U.S. markets offset
optimism about a euro zone economic recovery, while weak
earnings from Standard Chartered and Anheuser-Busch also
weighed.
The pan-European STOXX 600 index .STOXX settled 0.4% lower
after rising as much as 0.5%, with a jump in euro zone and U.S.
bond yields -- on expectations of increased inflation --
weighing on major stock sectors. GVD/EUR US/
Euro zone economic sentiment rose more than expected in
February, buoyed by more optimism in industry, services and
among consumers, boosting inflation expectations which have fed
into higher bond yields in recent weeks.
"Concerns about a resurgence of inflation only seem to have
strengthened, judging by the relentless bear steepening of the
U.S. Treasury curve and the newfound popularity of traditional
inflation hedges such as commodities," analysts at Rabobank
said.
"At this juncture, the pro-reflation arguments -- and
particularly the fear of inflation induced by ultra-loose
monetary and fiscal policies -- are clearly resonating with
markets."
Sectors such as healthcare .SXDP , utilities .SX6P and
other staples, which are considered bond proxies, fell on the
day amid continued pressure from higher yields.
But commodity-linked sectors .SXEP .SXPP were among the
best performers, boosted by multi-year highs in crude oil and
base metal prices. O/R MET/L
Weakness in U.S. markets due to profit taking in technology
stocks also spilled over into Europe late in the session. .N
Easy money stimulus from major central banks last year has
helped the benchmark STOXX 600 surge more than 50% since a
coronavirus-driven crash in March 2020.
Although the European index has so far underperformed the
U.S. S&P 500 .SPX , which is scaling record highs, fund
managers expect a rebound in corporate profits to send European
stocks to all-time peaks by the end of 2021, according to a
recent Reuters poll. In company news, Standard Chartered STAN.L slipped 6.2%
after posting a drop in its annual profit. Anheuser-Busch InBev ABI.BR , the world's largest brewer,
tumbled 6.2% even as it reported a higher-than-expected core
quarterly profit, while Bayer BAYGn.DE dropped 6.4% after
posting a drop in fourth-quarter core earnings due to
competition in the North American agriculture market.

In a bright spot, steel pipe maker Tenaris TENR.MI jumped
13.7% to the top of the STOXX 600 as quarterly sales rose from
the previous quarter due to a pick up in drilling activity.
Shares of heavily-shorted airline Air France KLM AIRF.PA
rose nearly 2%, with traders saying a short squeeze was driving
gains.