European Stocks Plummet on Inflation Fears and Rate Hike Expectations

European markets hit a one-month low on Tuesday as rising government bond yields and inflation data weighed on stocks. The pan-European STOXX 600 slipped 0.6% to 647.08, while Britain's FTSE 100 eased 0.3%, Germany's DAX dropped 1.1%, and France's CAC 40 fell 0.4%. Euro zone government bond yields climbed to fresh multi-year highs as investors priced in further rate increases from major central banks.

The European Central Bank is expected to raise interest rates next week, with a 25-basis-point hike predicted by LSEG data. Germany's 30-year government bond yield reached a 15-year high, while France's 30-year yield climbed to its highest level since 2008. The surge in energy prices has contributed to the inflationary pressures.

Despite the gloomy outlook, some stocks managed to rise on Tuesday. Energy stocks gained 1.8% as Brent crude traded above $92 a barrel. Novartis jumped 6.3% after its oral multiple sclerosis drug remibrutinib met the main goals in two late-stage trials.