European stocks fall as rising bond yields hit markets

European shares slipped on Tuesday as rising government bond yields and Middle East conflict fueled inflation concerns. Investors braced for potential interest rate hikes from major central banks ahead of key euro zone inflation data.

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The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, August 27, 2026. REUTERS/Staff

European shares slipped 0.2% to a more than one-week low during Tuesday morning trade as rising bond yields and energy costs drove investor caution. The pan-European STOXX 600 index retreated from recent highs amid renewed geopolitical tensions. Markets face mounting pressure as central banks signal potential monetary tightening.

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