European stocks drifted lower Thursday, while U.K shares notched modest gains as investors re-set assumptions for growth and inflation and grappled with the ongoing volatility in global fixed income markets.
Britain's FTSE 100 added around 7 points, or 0.1% by 10:00 GMT as basic material and consumer cyclical stocks crept higher. Major European markets, however, drifted lower, led by Germany, where the DAX fell around 45 points, or 0.4% by 11:00 CET. In France, the CAC-40 slipped 6 points, or 0.13%.
One early downside mover of note in the U.K. were shares in Virgin Money Holdings, which fell 6% at the open after a disclosure from BofA Merrill Lynch showed that U.S. billionaire Wilbur Ross's WL Ross & Co. had sold his 27 million-share stake in the so-called 'challenger' bank, representing 6.1% of its equity capital, or £171 million ($213 million).
Much of the recent market direction in the 8 days following Donald Trump's surprise U.S. election victory has been dictated by bets on his expected fiscal policies, which have driven the dollar to a 14-year high against a basket of global currencies and slammed bond investors with more than $1 trillion in losses as yields jumped in anticipation of faster inflation and speedier Federal Reserve rate hikes.
However, government bonds found a firm bid overnight in Asia, when the Bank of Japan stepped in to stem rising yields on benchmark JGBs by offering to buy unlimited quantities of 2-year and 5-year debt. The move pushed yields, which move in the opposite direction to prices, sharply lower.