European stock markets saw their biggest drop in a month, while bond yields rose, impacting risk appetite.

European stock markets experienced the largest monthly drop in over a month as bond yields rose ahead of important data releases in the United States later this week, dampening risk appetite. The Stoxx Europe 600 index closed down 1.5% on Tuesday. The FTSE 250 index fell by 2.1%. The CAC 40 index held up relatively well, with a decrease of only 0.7%, thanks to gains in LVMH and Kering, as HSBC raised its ratings on the two luxury goods giants to buy, anticipating a recovery in Chinese consumer demand. Global bonds generally fell. The yield on 30-year U.S. treasuries rose by 5 basis points to 4.98%, while yields on UK government bonds of the same maturity reached their highest level since 1998 as Prime Minister Starmaker strove to restore market confidence. Hawkish comments from ECB board member Isabel Schnabel and the latest euro zone inflation data indicate that the central bank will not cut interest rates at its next policy meeting. "Inflation in developed countries has not fully receded, which is affecting financial conditions and leading to a softening in the stock market, as holdings seem to be increasingly concentrated in certain sectors," said Geoff Yu, FX and macro strategist for BNY Mellon in Europe, the Middle East, and Africa.