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By William Watts, MarketWatch

European equities were mixed early Tuesday, losing some early ground as Italian and U.S. bond yields resumed their climb.

What are major indexes doing?

The pan-European STOXX 600 was down 0.1% at 371.92.

In London, the FTSE 100 was up less than 0.1% at 7,235.96, while, in Paris, the CAC 40 stock index gained 0.1% and Germany's DAX was off marginally at 11,943.11.

European stocks fell sharply on Monday, with Italy's FTSE MIB index dropping more than 2% as Italian bond yields soared and the spread between Italian and German bond yields widened, putting heavy pressure on bank shares. On Tuesday, the Italian benchmark index rose 0.4% to 19,935.28.

Read:Here's why investors remain uneasy about Italy's banks and the 'doom loop' (http://www.marketwatch.com/story/heres-why-investors-remain-uneasy-about-italys-banks-and-the-doom-loop-2018-10-08)

What's driving markets

Nervous investors continue to keep an eye on rising global bond yields. The yield on the 10-year U.S. Treasury note pushed to a new seven-year high (http://www.marketwatch.com/story/10-year-treasury-yield-nudges-to-seven-year-high-above-325-2018-10-09) early Tuesday above 3.25% after U.S. bond markets were closed Monday for a holiday. In recent action, the 10-year yield was up 1.2 basis points at 3.242%. Yields and debt prices move in opposite directions.

Italy had appeared to stabilize somewhat in early action. The yield on the 10-year government bond subsequently edged up, however, and the closely watched spread between the Italian bond and its German counterpart widened further.

The muted tone in Europe comes as Asian markets also steadied (http://www.marketwatch.com/story/nikkei-slips-but-chinese-stocks-bounce-back-after-mondays-plunge-2018-10-08). Chinese equities were mixed a day after selling off sharply as traders returned from a weeklong holiday.

What are analysts saying

Worries over global growth and emerging-market worries as U.S.-China trade tensions continue to overhang markets, said Naeem Aslam, chief market analyst at Think Markets UK, in a note, citing, among several factors, the International Monetary Fund's decision Monday to cut its global growth forecast (http://www.marketwatch.com/story/imf-downbeat-on-global-economic-outlook-2018-10-08) for this year and next.

"Clearly, there is a risk and the new outlook suggests fatigue is setting in and the mounting weakness in the emerging market could further dampen the outlook," he said. " The risk to global outlook have increased significantly in the past three months and there is no clear solution when the ongoing trade war between the U.S. and China will settle."

What stocks are moving

Oil stocks rose as crude prices bounced back from the previous day's weakness. Total SA (TOT) rose 1.1%, while shares of Royal Dutch Shell (RDSA.LN) (RDSA.LN) and BP PLC (BP.LN) rose 0.9%.

Shares of Airbus SE (AIR.FR) declined 1.4%. a day after the company tapped the head of its plane-making unit, Guillaume Faury, to succeed Tom Enders as chief executive in April, pending shareholder approval.

Shares of Sage Group PLC (SGE.LN) shed 3.5% in London.

(END) Dow Jones Newswires

October 09, 2018 04:55 ET (08:55 GMT)

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