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LIVE: FTSE falls and Wall Street rises after global bonds sell-off and weak US payroll data

How major markets are performing on Wednesday

Stocks: A currency trader watches monitors near the screens
Stock markets were volatile: A foreign exchange dealing room in South Korea. Asian markets tumbled on Wednesday. Photo: Ahn Young-joon/AP (Ahn Young-joon, Associated Press)

European stock markets fell into the red on Wednesday as a surprisingly strong US job market caused bond yields to surge.

In London, the FTSE 100 (^FTSE) was 0.8% lower on the day, hitting its lowest since 8 September during the session, while the CAC (^FCHI) was 0.1% down in Paris, and the Frankfurt DAX (^GDAXI) managed to eke out a 0.1% gain.

The bourses were also held back by a sell-off in mining stocks as prices of most metals continued to fall. Industrial metal miners slipped 0.9%, while precious metal miners shed 1.6%, tracking prices of metals, including copper and gold.

Across the pond, things were more positive. The S&P 500 (^GSPC) rose 0.3% by the time of the European close, and the tech-heavy Nasdaq (^IXIC) was 0.8% higher. The Dow Jones (^DJI) was trading flat at the time of writing.

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The positive mood came as a new survey by payroll operator ADP showed much fewer jobs were created at US companies last month than expected.

Private sector employment across the US rose by 89,000 jobs last month, far off the 153,000 increase which Wall Street economists expected.

The yield, or interest rate, on 30-year UK government bonds hit 5.115% according to Refinitiv data on Wednesday, as traders think inflation will be more sticky.

Meanwhile, the interest rate on German 10-year bunds have risen above 3%, for the first time since 2011.

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"The sharp rise in long term rates relative to short term rates suggests investors think that US interest rates are likely to remain higher for longer due to the continued resilience of the US economy," Michael Hewson, chief market analyst at CMC Markets, said.

"If this trend of rising long-term rates continues, then stock markets could well be in for even more volatility in the days and weeks ahead."

Sandrine Perret, multi-asset portfolio manager at Unigestion, said: "It’s a very difficult market. It is all back to yields, that’s the main driver of markets. The pivot that most investors were expecting in September has not come yet – that’s the big driver of all market pricing at the moment."

Watch: How does inflation affect interest rates?

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