Europe close: Markets mostly higher, but CAC falls on fiscal concerns

5th Oct 2026 15:18

(Sharecast News) - European stocks were mostly higher on Monday as a weaker euro and improving economic data lifted sentiment, though shares in Paris dropped sharply as concerns about government borrowed escalated.

The pan-European Stoxx Europe 600 index finished 0.2% higher at 632.38, with a 0.8% drop on the CAC 40 outweighed by modest gains elsewhere.

The euro dropped to a 16-month low against the dollar on Monday on the back of fears about French government spending and political uncertainty in Spain after prime minister Pedro Sanchez called for a snap election. The single currency was 0.4% lower against the greenback at $1.1212, touching an earlier low of $1.1160 not seen since May 2025.

Meanwhile, 10-year OAT (French government bond) yield was up 2 basis points at 4.867%, with the spread between French and German yields hitting multi-year highs.

"Parts of the European bond market remain a concern for investors, especially as political and fiscal gridlock in France pushes up the French- German 10-year yield spread, which is a key signal of financial stress," said Kathleen Brooks, research director at XTB.

"French banks are also under pressure on Monday, which is a sign that rising bond yields could feed into stock market weakness down the line, since banks are a major component of European indices."

Also weighing on the CAC 40 was Schneider Electric as shares tanked 10% after the French firm agreed to buy PTC in an all-cash deal valuing the US software company's equity at around $22.6bn.

In other equity news, London's BT Group after buying TalkTalk out of administration on a debt-free basis. BT estimated the total cash impact of the acquisition in FY27 at around £400m.

Paints manufacturer AkzoNobel was also higher after offloading its South-East Asian decorative paints arm to Nippon Paint for $1.35bn.

On the economics front, the S&P Global services PMI increased to a 10-month high of 53.0 last month, up from 51.6 in August and matching the preliminary estimates released two weeks ago. This sent the composite PMI across the region to its highest in three and a half years.

A separate survey showed investor confidence in the single currency bloc slipped in October, with the Sentix index falling to 2.7 from 5.1 a month earlier, missing expectations for a steady reading. The decline was driven by a sharp drop in the expectations component to 8.8, while the current situation gauge held at ‑3.3.