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European shares broadly lower amid higher bond yields, hawkish Fed

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European shares are mainly lower Thursday, as hawkish comments on US interest rates from Federal Reserve Chief Jerome Powell have raised the dollar and also pushed European bond yields higher. That has weighed on some stocks as it will likely mean higher costs for companies.

Greek banks also weighed, amid fears regulators could require additional capital from the firms.

By 1330 BST, the EUROSTOXX 600 was 0.77% lower, while the EUROSTOXX 50 had lost 0.48%. Reginal bourses were a little mixed. The German DAX rose 0.07%, while the French CAC was 1.12% in the red and the Spanish IBEX fell 0.19%.

Hawkish Fed comments

The Fed’s Powell said Wednesday that US interest rates remain a “long way” from neutral. That comment encouraged investors to more firmly price in a fourth 2018 rate hike in December. They’re also now anticipating at least three further Fed rate rises during 2019.

Those comments, further cementing expectations of higher US interest rates, worked to lift US Treasury yields and weigh on stock prices. This has spread to European bond yields and stocks too.

In addition to the effect of the comments from the US Fed, Greek bank stocks are suffering again Thursday, following declines Wednesday. Those falls are the consequence of a growing view that they may need to further increase their capital buffers.

Piraeus Bank shares slid 12.03% to 1.45%, Alpha Bank shares slid 1.41% to €1.40 and Eurobank Ergasias shares lost 16.59% to trade at €0.62.

Other stock movers

Danske Bank shares were among other stocks in focus Thursday. The Danish bank continues to experience repercussions from the findings of money laundering at its Estonian branch. The latest development is a US criminal investigation by the US DOJ. Danske Bank also announced it was ending tis share buyback programme early.

Danske Bank shares slid 3.85% to DKK159.85.

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