European stocks closed lower on Tuesday, reversing course after an earlier rally, as investors continued to weigh a spike in global bond yields against renewed optimism around artificial intelligence spending.
The pan-European STOXX 600 index fell 0.1%, having traded as much as 0.7% higher earlier in the session.
Germany’s DAX ended flat, while France’s CAC 40 and London’s FTSE 100 each slipped around 0.5%.
Technology and semiconductor stocks were the session’s clearest bright spot before the broader market faded.
Shares rose after Reuters reported that Anthropic’s IPO prospectus points to a sharp increase in spending on cloud, computing and infrastructure, a disclosure that has moved chip stocks across Europe and the US.
X-Fab Silicon Foundries rose 7.5% in Paris, while ams OSRAM gained 8.7% and Technoprobe climbed 6.8% in Milan.
Chip names lead, but broader gains fade
In Germany, Infineon Technologies rose 4.8%, Aixtron gained 4.3%, and Siltronic climbed 7.17%.
Amsterdam-listed ASML Holding rose 4.18%, ASM International gained 4.24%, and BE Semiconductor Industries added 4.42%.
STMicroelectronics gained 2.6%, and Soitec rose 9.08%.
In Vienna, AT&S gained 7.18%, while Brussels-listed Melexis rose 3.8%.
Eiffage shares fell 3%, and Vinci dropped 2.4% after the French government proposed a significant increase in the tax on motorway concessions and major airports.
Lindt & Sprüngli tumbled 8% after the Swiss chocolate maker cut its full-year organic sales growth forecast for the second time this year, citing subdued consumer sentiment and weak demand.
Julius Baer shares rose 7.2% after Switzerland’s financial regulator FINMA closed enforcement proceedings related to private debt loans and the bank’s client relationships with two Russian politically exposed individuals.
Legrand shares gained 6% after the French electrical and digital building infrastructure group raised its medium-term targets.
A rough month for European equities
September’s losses have snapped a six-month winning streak for the STOXX 600, which is down nearly 2% for the month and on track for its first monthly decline since March.
Equities have swung sharply throughout September, coming under pressure as sovereign bond yields touched their highest levels since the 2008 global financial crisis.
A fresh European Central Bank rate hike, persistent hawkish commentary from central bank policymakers, and warnings from AI industry figures about a potential development slowdown have all added to the selling pressure this month.
Rising sovereign yields act as the benchmark for pricing riskier assets, and as they climb, the discount rate applied to future corporate earnings expands, compressing equity valuations.
Middle East stalemate weighs on sentiment
A brief prospect of diplomatic breakthrough in the Middle East flared and quickly faded earlier this month, adding to investor fatigue.
Markets have effectively settled into a standoff following a sharp exchange of rhetoric between President Trump and Iranian leadership over the Strait of Hormuz.
With diplomacy stalled and military posture still tense, elevated energy prices continue to limit any broader relief rally in rate-sensitive sectors.
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