European stocks closed lower on Monday, influenced by rising government bond yields and warnings from European Central Bank officials against early interest rate cuts. The Stoxx 600 index closed down 0.5 percent as government bond yields in Europe increased after Philip Lane, the chief economist of the European Central Bank, said in an interview on Saturday that hastening interest rate cuts could lead to a new wave of inflation.
The president of the German Central Bank, Joachim Nagel, stated that "it is too early for the European Central Bank to discuss lowering interest rates." The yield on 10-year German bonds, a benchmark for the region, reached 2.201 percent. Traders expect a rate cut of about 150 basis points this year, with over 20 percent of them anticipating that reductions could start during the bank's meeting in March.
The basic resources sector led the declines, falling by one percent due to pressure on most base metal prices from the rising dollar. The personal and household goods sector lost 1.1 percent, with shares of the Swedish gaming group "Embracer" dropping by 8.8 percent. Also, cosmetics company L'Oreal's stock fell by 4.8 percent after UBS downgraded its rating for the company from "buy" to "neutral," while HSBC's shares declined by 2.2 percent.
