(Bloomberg) -- European stocks dropped with bonds as the yield on the region's benchmark debt climbed to its highest level in more than 17 months.
The Stoxx Europe 600 Index fell 0.7 percent the close in the biggest retreat in a week. The yield on German 10-year bunds rose 0.09 percentage point to 0.56 percent, the highest level since January 2016. Bonds across Europe dropped after the results of a French debt auction were published, which showed lower demand for French 30-year debt.
Bank stocks rose 0.7 percent, the biggest gain in the broader gauge. While Europe's equity benchmark has declined in the past month, banks have been a bright spot, boosted by speculation of higher interest rates and rescues in Spain and Italy.
- Shares were held back earlier Thursday by news on the Federal Reserve's policy stance and lingering geopolitical tension concerning North Korea's missile program. Minutes from the last Fed meeting, released after the European market closed, showed officials were divided over when to shrink the balance sheet and uneasy at recent weak readings of inflation.
- Construction shares, drugmakers and travel and leisure stocks were the sectors with the biggest declines.
- Sodexo SA led travel-and-leisure shares lower, falling percent after lowering its full-year revenue growth forecast for the second time.
- Associated British Foods Plc climbed 2.6 percent earlier after saying strong profit at its Primark unit has improved its annual outlook.
--With assistance from Chiara Remondini Chris Malpass and Elena Popina
To contact the reporter on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net.
To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net, Todd White, Richard Richtmyer
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