E
uropean stocks dipped on Monday as initial enthusiasm over strong US jobs data last week gave way to concerns over higher bond yields, particularly in rate-sensitive sectors like real estate and utilities. The index fell 0.2% by 0851 GMT, with real estate down 1.1% and utilities off 0.5%. Banking shares bucked the trend, rising 0.3%.

    Euro zone government bond yields continued their upward march, reaching a one-month high of 2.26% in Germany, as Friday's US labour market data reduced recession fears and trimmed rate-cut expectations. Traders now see a higher chance of a 25 basis-point Federal Reserve cut in November, a shift from last week's bets on a larger 50 bps move.

    The European Central Bank is likely to follow suit with another 25 bps cut later this month, as economic growth remains weak and inflationary pressures ease faster than expected. French Central Bank Chief Francois Villeroy de Galhau hinted at an October 17 rate cut, citing the risk of undershooting the 2% inflation target.

    Investor morale in the euro zone unexpectedly rose in October, driven by rising expectations despite growing dissatisfaction with the current situation. Luxury stocks were broadly higher, led by Richemont's 0.9% gain after agreeing to sell its online fashion business to Mytheresa. French luxury names like Kering and LVMH also rose between 0.9% and 2.4%, reflecting optimism over China's stimulus measures.

    Heidelberg Materials shares climbed 0.8% on reports that the Adani Group is in talks to buy its Indian cement operations for around $1.2 billion, a deal that could be worth billions.