European shares slip as bond yields rise

European shares fell on Thursday, as rising euro zone sovereign bond yields intensified investors' worries that the currency bloc's debt crisis would spread further, and that the region is headed for recession, according to Reuters. Spanish bond yields hit 6.98 percent, their highest level since 1997, at a 10-year auction. A French bond auction also saw high yields. The spread between French 10-year government bonds and their German equivalents rose to a euro-era high of 200 basis points on fears that the debt crisis engulfing the euro zone is spreading to its larger economies. Italian 10-year bond yields remained above 7 percent, even as the European Central Bank tried to stem the crisis by buying bonds. Italian bond yields are at the level reached in Greece, Portugal and Ireland when those countries needed to be bailed out. France and Italy, the euro zone's second and third biggest economies, are considered too big to be bailed out, however. Stocks fell across the board, with the heavyweight banking index among the casualties. France's BNP Paribas fell 3.6 percent. The STOXX Europe 600 Banking Index fell 1.6 percent, and has lost more than 35 percent in 2011, as banks have taken huge writedowns on exposure to euro zone sovereign debt. Across Europe, France's CAC40 fell 1.2 percent, Italy's FTSE MIB fell 1.2 percent, and Spain's IBEX fell 0.8 percent. At 0955 GMT, the FTSEurofirst 300 index of top European shares was down 1.1 percent at 960.26 points.