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

Published 02/23/2021, 05:59 PM
Updated 02/24/2021, 01:10 AM
© Reuters.
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* 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
But U.S. yields retreated slightly after U.S. Federal
Reserve Chair Jerome Powell downplayed concerns over
inflationary pressures and reiterated continued monetary
support. European 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. Swiss packaging firm SIG Combibloc Group SIGNC.S bottomed
out the STOXX 600 after its annual core earnings missed
estimates. German 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. French 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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