More sales of
German government bonds weighed on European stock markets on Monday,
while the dollar retreated after a report - later denied - that
President Barack Obama had expressed concern over its strength after a
year-long rally.
Turkey's main stock index .XU100 tumbled 6 percent and the lira hit a record low after the ruling AK Party failed to win a majority in parliamentary elections, leaving the country facing the prospect of weeks of political turmoil.
The rise in 10-year Bund yields since mid-April has made them a central driver of global markets and they gained 4 basis points in the first hour of trade in Europe, rattling stock markets.
Deutsche Bank shares bucked the trend to jump 6 percent (DBKGn.DE) after it replaced its leadership, while German industrial output numbers offered hope of better growth in Europe's biggest economy.
The data reinforced investors' view that Europe is edging away from the deflation that has driven the interest generated by a number of mainstream debt and money market contracts below zero.
Higher yields on bonds make stocks, which hit 8-year highs in April right before Bunds started to move, less attractive, drawing more money back into the bond market. But if signs of improved economic growth are one driver of that move, that should help share values.
"Rising bond yields have triggered a correction in the Euro Stoxx 50 index of around 8 percent, close to the size during the 'taper tantrum' (fear of U.S. interest rates rises) in 2013," Goldman Sachs analysts said in a note to clients.
"This time, however, Europe is in the driving seat. Stronger growth is generating a reflationary rotation. Short-term volatility is likely, but we expect the equity market to shrug off higher yields in time."
Germany's DAX .GDAXI fell 0.6 percent and France's CAC .FCHI by 0.8 percent, pushing the blue chip Euro Stoxx 50 index down 0.7 percent.
Turkey's main stock index .XU100 tumbled 6 percent and the lira hit a record low after the ruling AK Party failed to win a majority in parliamentary elections, leaving the country facing the prospect of weeks of political turmoil.
The rise in 10-year Bund yields since mid-April has made them a central driver of global markets and they gained 4 basis points in the first hour of trade in Europe, rattling stock markets.
Deutsche Bank shares bucked the trend to jump 6 percent (DBKGn.DE) after it replaced its leadership, while German industrial output numbers offered hope of better growth in Europe's biggest economy.
The data reinforced investors' view that Europe is edging away from the deflation that has driven the interest generated by a number of mainstream debt and money market contracts below zero.
Higher yields on bonds make stocks, which hit 8-year highs in April right before Bunds started to move, less attractive, drawing more money back into the bond market. But if signs of improved economic growth are one driver of that move, that should help share values.
"Rising bond yields have triggered a correction in the Euro Stoxx 50 index of around 8 percent, close to the size during the 'taper tantrum' (fear of U.S. interest rates rises) in 2013," Goldman Sachs analysts said in a note to clients.
"This time, however, Europe is in the driving seat. Stronger growth is generating a reflationary rotation. Short-term volatility is likely, but we expect the equity market to shrug off higher yields in time."
Germany's DAX .GDAXI fell 0.6 percent and France's CAC .FCHI by 0.8 percent, pushing the blue chip Euro Stoxx 50 index down 0.7 percent.
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