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European Markets Close Lower After Cautious Session

European markets closed on a weak note on Monday as investors largely stayed reluctant to pick up shares amid rising bond yields and on concerns the aggressive vaccine rollouts and fiscal stimulus might stoke inflation.

Markets were also digesting a slew of earnings news and other corporate announcements, in addition to following the updates on coronavirus cases and relaxation in lockdown restrictions in several parts across the continent.

The dollar slid to multi-year lows against sterling and other major currencies, while benchmark U.S. Treasury yields hit a near one-year high as the reflation trade emerged as a key theme.

The pan European Stoxx 600 drifted down 0.44%. The U.K.'s FTSE 100 ended down 0.18% and Germany's DAX slid 0.31%, while France's CAC 40 and Switzerland's SMI edged down 0.11% and 0.07%, respectively.

Among other markets in Europe, Belgium, Czech Republic, Denmark, Finland, Iceland, Netherlands, Poland, Portugal, Russia, Spain, Sweden and Turkey closed weak, while Austria, Greece, Ireland and Norway ended higher.

In the UK market, Ocado Group and Scottish Mortgage lost 6.1% and 5.85%, respectively. Just Eat Takeaway slid 4.6%, while Smith & Nephew, Aveva Group, Reckitt Benckiser, Spirax-Sarco Engineering, B&M, Rentokil, Experian and National Grid lost 2 to 4%.

Shares of travel operator Tui climbed more than 5%. Several other travel-related stocks too gained in strength after the U.K. outlined its emergence from lockdown.

Among the gainers, IAG, Rolls-Royce Holdings, Informa, Compass Group, IHG, Flutter Entertainment, Whitbread, Aviva, BP, Royal Dutch Shell, WPP, HSBC Holdings and British Land moved up sharply.

In the French market, Valeo, Dassault Systemes, Renault, WorldLine, Teleperformance, STMicroElectronics, Schneider Electric, Capgemini and Legrand lost 2 to 5%.

On the other hand, Sodexo, Accor, Airbus, Safran, Unibail Rodamco, BNP Paribas, Veolia, Thales, Publicis Groupe and Societe Generale posted strong gains.

In Germany, Lufthansa, Deutsche Bank, Covestro, Volkswagen, MTU Aero Engines, HeidelbergCement, BASF and Deutsche Post gained 1.5 to 3.4%, while RWE, Continental, E.ON, Adidas, Henkel, Infineon Technologies and Fresenius Medical Care drifted lower.

In economic news, German business confidence strengthened in February, survey results from ifo Institute showed earlier today.

The business confidence index rose to 92.4 from 90.3 in the previous month. This was better than the economists' forecast of 90.5.

The German economy is likely to recover from this spring after an estimated contraction in the first quarter of 2021, Bundesbank said in its monthly report released today.

The bank noted that the second wave of Covid-19 pandemic thwarted Germany's economic recovery at end of 2020. Economic activity was still almost 4% down on the pre-crisis level of the fourth quarter of 2019.

Further, the bank said consumer prices surged in January due to the extensive adjustments to the expenditure weights underlying the harmonized index of consumer prices.

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