European Shares Head for First Monthly Loss in Six as Bond Yields Surge

European shares are on track for their first monthly decline in six months due to rising bond yields, which have reduced the appeal of risk assets. The pan-European STOXX 600 index is down 1.7% for the month and nearly flat for the third quarter.

The surge in global bond yields has led major central banks, including the Federal Reserve and the European Central Bank, to raise interest rates or adopt a more hawkish stance this month. This move has been attributed to the Iran war, deteriorating government finances, and a glut of issuances.

Oil prices have risen nearly 14% for the month, but energy shares are down roughly 1%. The 10-year German bund yield, a euro zone benchmark, is hovering around its 2009 high. Investors will continue to focus on whether bond yields will sustain their recent surge.

Britain's economy grew faster than previously thought in the second quarter, while France's inflation reading for September came in higher than expected. Germany's preliminary September inflation data due later today may provide insight into the euro zone's largest economy and broader inflation outlook.