European shares end mixed, UK stocks lead as yields decline

As European traders wrapped up the session, the region's main stock benchmarks closed on a mixed note. The UK's FTSE 100 posted the strongest advance, followed by France's CAC and Germany's DAX. Spanish and Italian indexes moved lower.

The closing figures:

• Germany's DAX climbed 69.41 points, or 0.27%, to end at 25,368.03.

• France's CAC gained 61.59 points, or 0.78%, closing at 7,934.71.

• The UK's FTSE 100 rose 115.47 points, or 1.08%, to 10,840.34.

• Spain's IBEX 35 dropped 53.00 points, or 0.28%, to 19,177.71.

• Italy's FTSE MIB declined 356.29 points, or 0.72%, to 49,397.56.

The gap between UK and Italian yields stood at roughly 1.8 percentage points. Buyers dominated in certain markets, but the advances were far from uniform.

European bond yields moved lower on the day.

Benchmark 10-year yields dropped across the continent's main economies, with Spanish and Italian bonds posting the largest falls:

• Germany's 10-year yield fell 3.0 basis points to 3.412%.

• France's yield dropped 6.7 basis points to 4.794%.

• The UK's yield decreased 4.1 basis points to 5.379%.

• Spain's yield slid 7.0 basis points to 4.023%.

• Italy's yield declined 6.9 basis points to 4.491%.

The declines in French, Spanish and Italian yields outpaced Germany's, narrowing the yield gap with the German benchmark.

US equities were also mixed: the Dow climbed, the Nasdaq fell, and the S&P 500 fluctuated around the flatline.

With European traders winding down, Wall Street also showed a divergent picture:

• The Dow rose 495.03 points, or 0.96%, to 52,121.20.

• The S&P 500 added 8.30 points, or 0.11%, closing at 7,727.24.

• The Nasdaq Composite lost 97.11 points, or 0.36%, to 26,595.75.

• The Russell 2000 gained 22.34 points, or 0.82%, to 2,751.87.

• The Nasdaq 100 fell 180.23 points, or 0.60%, to 29,770.58.

The Dow and small-cap stocks led the session, whereas the technology-heavy indexes stayed weak. The drop in bond yields gave markets some support, but tech stocks still lacked buying demand.

Treasury yields moved lower, with the long-dated maturities falling the most.

Despite a stronger-than-expected PPI reading, US Treasury yields were down across the curve:

• The 2-year yield fell 3.2 basis points to 4.770%.

• The 5-year yield dropped 4.9 basis points to 4.861%.

• The 10-year yield declined 8.8 basis points to 5.102%.

• The 30-year yield slid 9.5 basis points to 5.429%.

The steeper drops in longer maturities flattened the yield curve.

The US dollar was broadly weaker, though the Australian dollar moved against the trend.

The greenback lost ground against most major peers in the late European session:

• EUR/USD traded at 1.1204, up 0.43%.

• GBP/USD rose 0.45% to 1.3250.

• USD/JPY fell 0.08% to 158.19.

• USD/CHF declined 0.64% to 0.8293.

• USD/CAD slipped 0.29% to 1.4195.

• NZD/USD gained 0.29% to 0.5607.

• AUD/USD dropped 0.80% to 0.6913.

The Australian dollar's weakness stood out as the US dollar fell broadly. Weaker-than-expected Australian employment data sealed the pair's bearish fate for the session, although the price has recovered from its lows. A technical look at AUD/USD is available here.

For EUR/USD, the decline (a stronger dollar) following the PPI and other aata found support at the 100-hour moving average of 1.11867. The pair has since moved back above the 200-hour moving average at 1.1201. The 100-hour MA serves as a gauge for bullish and bearish sentiment. Remaining above it keeps buyers engaged, while a break below would give sellers the upper hand.

GBP/USD also found support around the 100- and 200-hour MAs, which are close together at 1.32327. For the upside, a clear and sustained break above 1.3273 would be needed to strengthen the bullish outlook.