European Markets See-Saw Amid Defence Rally and Bond Pressure

European shares experienced volatility as defence stocks lost momentum and rising bond yields pressured the market. The STOXX 600 index flattened, aerospace and defence stocks showed gains, while the technology sector lagged due to Capgemini's slump. Investor sentiment was impacted by high bond yields and economic news.

European shares retreated from record highs as Capgemini's decline in IT stocks and rising bond yields pressured the market. The pan-European STOXX 600 index hit a flat note, trading at 555.40 points by 0920 GMT.

Aerospace and defence stocks rose, with Italy's Leonardo and Britain's BAE Systems among notable gainers. The sector had witnessed a significant surge after the European Commission's proposal to exempt defence spending from EU budget limits. Meanwhile, U.S. and Russian officials met for high-level talks on the Ukraine war in Riyadh.

Capgemini's 9% drop in shares, caused by a reported decline in sales, led the technology sector down by 1.1%. Elevated bond yields weighed heavily on the market, benefiting the banking sector while dragging down rate-sensitive sectors like utilities and real estate.