European equities fell on Thursday as higher sovereign bond yields, persistent inflation concerns, diplomatic uncertainty between Washington and Tehran, artificial-intelligence risks and fiscal pressures in France weakened risk appetite. The STOXX 600 declined 0.4%, Germany’s DAX fell 0.6%, France’s CAC 40 lost 0.4% and London’s FTSE 100 slipped 0.3%, while Euro Stoxx 50 and Stoxx 600 futures had earlier indicated declines of 0.6% and 0.5%. France’s 10-year OAT yield reached 4.6%, its highest level since July 2008, and Germany’s 10-year Bund yield moved above 3.5%, a level last seen in mid-2009. Strong September activity surveys in the euro zone, Germany and the United States, rising oil and gas prices, hawkish central-bank signals and higher Treasury yields increased expectations for further rate increases. The euro-zone private sector expanded at its fastest pace in nearly three and a half years, Germany recorded its strongest expansion in 11 months and US activity reached its highest level since July 2021. France’s projected budget deficit of 5.4% of GDP, compared with 5.1% in 2025, parliamentary gridlock and multi-year highs in the cost of insuring French debt against default added to pressure on OATs. Investors also monitored stalled US-Iran diplomacy, the reopening of the Strait of Hormuz, planned talks between Chinese President Xi Jinping and U.S. President Donald Trump, AI deployment and regulatory concerns, and upcoming German and French confidence data.