European bourses tracked unevenly lower midday Monday as traders focused on the political landscape in France, contemplating the possibility that the present government could be challenged. French stocks and bonds saw declines as Prime Minister Michel Barnier's budget proposal threatens to provoke a no-confidence vote from the National Rally party, raising concerns about a potential government shake-up.
Yields on 10-year France national bonds hovered around 2.90%, nearly 90 basis points higher than their German counterparts, reflecting investor unease towards Paris. While retail stocks defied negative trends to gain ground on the continent, property and tech sectors lagged behind. Investors also monitored Wall Street futures, which showed signs of a mild downturn, contrasting with stronger performances overnight in Asian markets spurred by solid manufacturing reports from mainland China.
However, the Eurozone purchasing managers index (PMI) recorded a drop to 45.2 in November from 46.0 in October, slipping further below the critical level of 50 that indicates the transition from growth to contraction, as reported by S&P Global. The pan-continental Stoxx Europe 600 Index declined by 0.2% by mid-session.
The Stoxx Europe 600 Technology Index fell by 0.5%, while the Stoxx 600 Banks Index inched up by 0.1%. The Stoxx Europe 600 Oil and Gas Index and the Stoxx 600 Europe Food and Beverage Index both slipped by 0.2%. The REITE, a European REIT index, recorded a decline of 0.8%, although the Stoxx Europe 600 Retail Index managed to gain 1.1%.
In national market indexes, Germany's DAX rose by 0.6%, while the FTSE 100 in London increased by 0.1%. The CAC 40 in Paris fell by 0.5%, and Spain's IBEX 35 rose by 0.7%. Yields on benchmark 10-year German bonds dropped to around 2.05%. Meanwhile, front-month North Sea Brent crude oil futures increased by 1% to $72.53 per barrel.
The Euro Stoxx 50 volatility index rose by 1.7% to 17.25, indicating below-average volatility for European stock markets over the next 30 days, which can be interpreted as a positive signal. A reading above 20 suggests impending volatility, while below 20 indicates calmer market conditions..