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European Markets Dropped Due To Rising Bond Yields

After snapping a seven session losing streak yesterday, the European markets dropped again Thursday. The markets got off to a weak start after U.S. markets finished Wednesday's session in the red and have slipped further after Thursday's weak opening on Wall Street.

The continued rise in bond yields has applied further pressure to equities. Energy and mining stocks were also under pressure due to the recent rise in the value of the U.S. dollar.

The Bank of England decided to stand pat on rates on "Super Thursday" as widely expected, but hinted at somewhat earlier and deeper-than-expected rate hikes. The central bank raised its near-term growth projections, citing strengthening global growth, and forecast inflation to remain above 2 percent target over the forecast horizon.

The pan-European Stoxx Europe 600 index weakened by 1.60 percent. The Euro Stoxx 50 index of eurozone bluechip stocks decreased 2.24 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 1.45 percent.

The DAX of Germany dropped 2.62 percent and the CAC 40 of France fell 1.98 percent. The FTSE 100 of the U.K. declined 1.49 percent and the SMI of Switzerland finished lower by 2.36 percent.

In Frankfurt, Commerzbank fell 2.90 percent. The lender aims to reinstate a dividend in 2018 after reporting better-than-expect revenue and profit for the fourth quarter.

In Paris, Vinci dropped 3.64 percent despite the concessions and construction company posting higher full-year 2017 net income and predicting a further rise in profits and revenue this year.

Societe Generale jumped 1.95 percent. The bank delivered a surprise profit in the fourth quarter, beating expectations for a loss affected by several exceptional items.

Publicis Groupe advanced 3.95 percent after the advertising group delivered fourth-quarter and full-year revenues in line with estimates.

Drinks company Pernod Ricard rallied 2.13 percent as it reported a 25 percent increase in its profit for the first half of 2018, reflecting a reduction in financial expenses and positive non-recurring items.

Oil & gas company Total SA rose 0.70 percent after its fourth-quarter net profit soared 86 percent from last year on the back of higher oil prices.

In London, TalkTalk Telecom sank 10.03 percent after it issued a profit warning and announced a temporary reduction in dividends in order to fund investment in growth.

Thomas Cook tumbled 3.91 percent after the travel giant warned of an unpredictable market.

Beazley Group jumped 5.46 percent. After reporting a 43 fall in pretax profit in 2017, the insurer said it saw potential for double-digit premium growth this year.

Compass Group increased 5.32 percent after it said its outlook for 2018 is positive. The company now expects to be above the middle of its target 4 percent to 6 percent organic growth range for the full year.

GSK shares rallied 1.43 percent. The pharmaceutical company expects to maintain its full-year dividend after reporting record revenues for 2017.

GKN fell 1.51 percent after Prime Minister Theresa May said that the business department would look closely at a hostile bid for the engineering company. Melrose shares were marginally lower.

Fund manager Ashmore advanced 0.67 percent after saying it sees another strong year for emerging markets.

Zurich Insurance Group dipped 0.36 percent in Zurich after its 2017 profit topped forecasts.

Swiss Re advanced 2.08 percent amid reports that Japan's Softbank is in talks to acquire a stake in the reinsurer.

Akzo Nobel NV rallied 2.85 percent in Amsterdam after backing its 2020 outlook.

UniCredit rose 2.09 percent in Milan after its fourth-quarter results topped analyst expectations.

Germany's exports and imports increased unexpectedly in December, figures from Destatis revealed Thursday.

Exports rose 0.3 percent month-on-month in December, slower than the 4.1 percent increase seen in November. However, shipments were expected to fall 1 percent.

Similarly, monthly growth in imports eased to 1.4 percent from 2.2 percent in November. Economists had forecast a 0.8 percent drop for December.

As imports growth exceeded the rise in exports, the trade surplus fell to a seasonally adjusted EUR 21.4 billion from EUR 22.3 billion a month ago.

UK house price balance remained stable in January and buyer enquiries continued to fall, data from the Royal Institution of Chartered Surveyors showed Thursday. The house price balance remained at 8 percent in January, while it was forecast to drop to 5 percent.

China's exports grew more-than-expected on global demand at the start of the year, and imports surged as factories lifted stocks ahead of the holidays, data from the General Administration of Customs revealed Thursday.

In dollar terms, exports advanced 11.1 percent year-over-year in January, faster than the 10.7 percent rise economists had forecast and a 10.9 percent rise posted in December.

Imports surged 36.9 percent in January from a year ago, well above the expected growth of 10.6 percent.

Due to higher imports, the trade surplus fell to $20.34 billion in January, which was well below the expected level of $54.65 billion.

by RTT Staff Writer

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