BRUSSELS/FRANKFURT/PARIS (dpa-AFX) - European stocks may drift lower at open on Thursday as investors weigh inflation concerns and await key U.S. economic data this week for additional clues on the Federal Reserve's rate trajectory.
Reports on U.S. initial jobless claims and new home sales are due later in the day, followed by data on durables goods orders for August and consumer confidence index score from the University of Michigan on Friday.
Markets currently price in a 55 percent chance of a Federal Reserve rate hike next month, according to the CME's FedWatch tool.
Closer home, German business sentiment survey results as well as reports on French manufacturing sentiment and consumer confidence will be in the spotlight later today.
Asian markets were broadly lower, even as Japan's Nikkei jumped more than 1 percent as Tokyo markets reopened after a three-day holiday.
A cautious undertone prevailed after oil prices rose sharply overnight and U.S. bond yields jumped to their highest levels in nearly two decades on inflation concerns.
Japanese 10-year government bond yield rose to a 30-year high as a weaker yen and surging U.S. yields added to inflationary pressures.
Meanwhile, traders eagerly await the outcome of a crucial U.S.-China summit later today for direction.
After an unscheduled meeting with Chinese Vice Premier He Lifeng, U.S. Treasury Secretary Scott Bessent announced the extension of Busan trade truce from November 10 to January 10, easing the immediate risk of a renewed escalation in tariffs between the world's two largest economies.
The dollar index clung to a two-month high while the U.S. 10-year Treasury yield was little changed after reaching the highest since 2007 overnight.
Gold held steady below $4,300 an ounce while Brent crude prices fell toward $102 a barrel, paring gains from the previous session amid heightened uncertainty surrounding U.S.-Iran negotiations.
U.S. stocks ended lower overnight while oil and bond yields rose, rekindling inflation and interest-rate concerns.
Oil prices jumped around 4 percent to snap a five-day losing streak after U.S. President Trump threatened to 'annihilate' Iran and Iranian President Masoud Pezeshkian condemned what he called 'signs of a bullying mentality' from the U.S. and said that Iran would never surrender but believes in diplomacy.
Earlier in the day, Iran's security chief Mohsen Rezaei said the Strait of Hormuz would not be reopened while Iran's conditions are not met.
The 10-year Treasury yield jumped 0.17 percentage point to 5.13 percent, its highest level since July 2007 and marking its biggest single-day rise since May, driven by a weak Treasury auction and a surprisingly strong report showing rising private-sector business activity and price pressures.
The Dow dropped 0.7 percent, the tech-heavy Nasdaq Composite declined 1.1 percent and the S&P 500 gave up 0.8 percent.
European stocks declined on Wednesday amid concerns about fuel prices hitting record highs across Europe due to wars in Iran and Ukraine.
The pan-European STOXX 600 dropped 0.4 percent. The German DAX fell 0.7 percent, France's CAC 40 dipped 0.4 percent and the U.K.'s FTSE 100 finished marginally lower.
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