European markets bounce back after U.S. sees rate-induced sell-off; Stoxx 600 up 1.1%

LONDON — European stocks advanced on Wednesday, looking to shrug off market nerves after a rate-induced sell-off in the U.S. in the previous session.

The pan-European Stoxx 600 climbed 1.1% by late morning, with autos and tech stocks each adding 1.6% to lead gains as all sectors and major bourses traded in positive territory.

Europe investors are closely watching movements in U.S. markets after the Nasdaq Composite dropped 2.83% to 14,546.68 on Tuesday to record its worst day since March. The S&P 500 shed 2.04% and the Dow Jones Industrial Average lost 569.38 points, or 1.63%.

Stocks across industries slid as the benchmark 10-year Treasury yield touched a high of 1.567%, a move that prompted tech stocks to lead the broader markets lower with Facebook, Microsoft and Alphabet losing more than 3%.

Rising bond yields hurt growth stocks, including tech stocks, because they lower the relative value of future earnings, and make the popular stocks appear overvalued.

Stock picks and investing trends from CNBC Pro:

Overnight, Asia-Pacific stocks fell in Wednesday trade following the tumble on Wall Street while U.S. stock futures moved higher in early premarket trade.

European market attention will be on central banks today with U.S. Federal Reserve Chairman Jerome Powell, European Central Bank President Christine Lagarde, Bank of Japan Governor Haruhiko Kuroda and the Bank of England’s Governor Andrew Bailey all speaking at the ECB Forum on Central Banking on Wednesday.

On Tuesday, U.S. traders followed testimony from Powell to the Senate Banking Committee during which the central bank chief said that inflation could persist longer-than-expected.

EU economic sentiment improved in September after declining in August, as optimism rose among consumers and the industrial and construction sectors, official data revealed Wednesday. The European Commission’s economic sentiment index hit 117.8 in September from 117.6 in August, following a record high 119.0 in July.

In terms of individual share price movement, Dutch semiconductor equipment maker ASMI climbed 7.5% after projecting double-digit growth on the back of an increase in chip usage. Deutsche Bank raised its price target for the stock on Wednesday morning.

At the bottom of the Stoxx 600, Royal Mail fell 6.1% after UBS downgraded the stock to “sell” from “buy” and cut its price target.

Enjoyed this article?
For exclusive stock picks, investment ideas and CNBC global livestream
Sign up for CNBC Pro
Start your free trial now

– CNBC’s Tanaya Macheel and Eustance Huang contributed reporting to this story.