European shares edge higher as bond selloff stabilizes ahead of US data (updated)

Swiss Life Holding AG

03/09/2025 11:14

Recasts with close of trading, adds market details

STOXX 600 ends 0.65% higher

Adidas up on bullish brokerage ratings

Euro zone economic growth remains sluggish in August, PMI shows

Swiss Life down after weaker first-half net profit

By Johann M Cherian, Tristan Veyet and Nikhil Sharma

Sept 3 (Reuters) - European shares ended higher on Wednesday, stabilising as investors assessed fiscal challenges after a selloff in longer-dated bonds had sparked risk-off sentiment in the previous session.

The continent-wide STOXX 600 .STOXX index closed 0.65% higher at 546.72 points, boosted by healthcare stocks .SXDP such as Roche Holdings ROG.S and AstraZeneca AZN.L.

Basic resources .SXPP also extended support by rising 1.5%, influenced by a jump in copper prices on growing expectations of a U.S. interest rate cut later in the month.

The day's moves follow the STOXX 600's biggest one-day loss in a month on Tuesday, driven by a multiyear jump in bond yields amid mounting concerns about fiscal pressures in developed economies.

France's 30-year yield FR30YT=RR fell about 5 basis points to 4.4547% after hitting a 16-year high on Tuesday, but caution prevailed amid political worries as Prime Minister Francois Bayrou's government braces for a no-confidence motion next week.

Losing the key vote could collapse Bayrou's minority coalition government and push France into deeper political and fiscal uncertainty.

The developments were triggered by the prime minister's pushing through of unpopular plans for a budget squeeze in 2026.

Long-dated bond yields in Germany DE30YT=RR and Italy IT30YT=RR also settled down after the previous day's spike.

"What we see today is maybe a small correction on the poor performance that we have seen yesterday ... bonds have stabilized now, but of course the risks have not disappeared," said Teeuwe Mevissen, senior market economist at Rabobank.

Meanwhile, Adidas ADSGn.DE climbed 4.8% after brokerage Jefferies raised its rating on the German sportswear brand to "buy" from "hold" and J.P.Morgan placed it on a positive catalyst watch. STOXX 600's retail sub-index .SXRP jumped 1.5%.

Investors were also entering a volatile period, with September historically a tough month for markets.

On the data front, a private survey showed the euro zone economy kept expanding at a snail's pace in August, as weaker services growth offset improved manufacturing output.

German services sector activity contracted slightly in August after a marginal expansion in July, as new business shrank again, a survey showed.

German airline Lufthansa LHAG.DE dipped 0.4%. Germany's VC pilots' union called for a strike late on Tuesday after the collapse of talks with the airline on its pension scheme.

Across the Atlantic, softer-than-expected data on U.S. job openings further strengthened bets for an interest rate cut in September. Investors were now squarely focused on Friday's nonfarm payrolls numbers that could further guide the Federal Reserve's policy moves.

Swiss Life SLHN.S fell 1.2% after the insurer posted a lower first-half net profit due to higher tax expenses.

Insurance companies are among the top investors in longer-dated bonds, and a selloff in bonds could weigh on their portfolio valuations. The sector .SXIP lost 0.5% on Wednesday and has declined 2.5% this week.

Genmab GMAB.CO jumped 5.1% after the company said new trial results showed its cancer drug Epcoritamab can be given in an outpatient setting for adults with relapsed or refractory lymphoma.

(Reporting by Tristan Veyet in Gdansk and Johann M Cherian and Nikhil Sharma in Bengaluru, Editing by Sherry Jacob-Phillips, Shinjini Ganguli and Matthew Lewis)