European shares pinned at one-month low as flaring Mideast tensions lift bond yields

European stocks struggled to stay above a one-month low on Wednesday, as a surge in bond yields responded to worsening Middle East tensions and fears of energy-induced inflation. The pan-European STOXX 600 index remained unchanged at 647.87 points by 0714 GMT, while Germany's DAX index slipped 0.2%. U.S.-Iran relations resuming a military stance this week pushed Brent crude prices over $95 a barrel, reaching a six-week peak, and amplified worries about inflation amid high government debt.

German 10-year bond yields reached their highest level since April 2011, while data from LSEG suggested a nearly 40% probability that the European Central Bank's deposit rate could reach 3% by March 2027, up from a 25% likelihood the previous week. Among individual companies, Lottomatica fell 6.3% and was briefly suspended after the Italian gaming firm announced it would acquire Spain’s Cirsa to form a combined entity.

The media industry shed 1.5% and led the overall market decline. Telecom shares, however, gained ground, with Nokia Oyj rising nearly 2% following confirmation from index provider STOXX that the Finnish telecom equipment company would rejoin the Euro STOXX 50.