European Stocks Struggle as Inflation Figures Defy Forecasts

European stock markets are struggling as September inflation figures in Germany, France, Italy, and Spain came in above forecasts. The energy shock is driving up prices across sectors, keeping pressure on the European Central Bank to raise interest rates again.

In France, the government's 10-year bond yield reached its highest level since 2002, making borrowing more expensive for companies. This has pushed investors to demand higher returns from Paris, which could spill over into the rest of the eurozone due to France's sizeable economy.

ECB President Christine Lagarde said a measured response is still appropriate despite the energy shock, but markets are pricing in another rate rise before the end of the year. The crisis is not just about inflation, but also about stretched government finances and high borrowing costs for companies.