European Stocks Slip Amid Rising Bond Yields and Energy Prices

European stocks opened September lower due to rising government bond yields and energy price hikes. The jump in oil and European natural gas prices has revived inflation worries, pushing investors to demand higher yields for long-term government bonds.

The pullback is largely attributed to the rates-plus-energy story. Germany's 30-year government bond yield hit a fresh 15-year high of $92, while France's 30-year yield reached its highest level since 2008 at around $92. This increase in bond yields raises the 'discount rate' used to value future corporate profits, making pricey growth-heavy shares less attractive.

The market is waiting for the European Central Bank's next move, with traders leaning towards a 25-basis-point hike as soon as next week based on data tracked by LSEG. This is in anticipation of fresh eurozone inflation figures, which will shape expectations for central banks.