European stocks slip as lack of progress on US-Iran peace lifts oil, yields

European stocks fell on Wednesday as the lack of progress on the US-Iran peace talks pushed oil prices back over $100 a barrel, leading to a rise in government bond yields. The Stoxx 600 index ended the session 0.44% lower at 639.92, after initially gaining earlier in the day. Major regional bourses also experienced declines. Brent crude futures increased by more than 1%, reaching a two-week low after five consecutive days of dropping.

The yield on Germany's 10-year bond, a key euro zone benchmark, was last at 3.55%, while the US 10-year Treasury yield rose to 5.085%, its highest since 2007. Steve Sosnick, chief market analyst at Interactive Brokers, noted that the lack of positive dialogue between Iran and the US left markets with little reason to expect a quick end to the conflict.

Most sectors on the Stoxx 600 fell, apart from energy shares which rose by 1.3%. Bank stocks saw a decline of 0.4%, insurance and construction and materials companies experienced the steepest percentage drop, falling by 1.7% and 1.3% respectively. The sharp market moves followed a week of global market rally, as oil prices and bond yields surged, and the European Central Bank delivered its second interest rate hike this year.

Meanwhile, the S&P Global PMI survey revealed that business activity in the euro zone surged this month at its fastest rate in over three years, despite expectations of a slowdown. Traders are also eagerly anticipating a meeting between US President Donald Trump and his Chinese counterpart Xi Jinping, which will be closely scrutinized for insights into trade relations and the global economic outlook.

Individual stocks also saw some volatility, with Arcadis falling 2.9%, WSP Global dropping 9%, and Adyen declining by 4.7%.