Higher yields weigh on stocks
ECB seen cutting rates again in Oct
Luxury stocks rise on China optimism

Oct 7 Reuters European stocks slipped on Monday as the initial euphoria over strong U.S. jobs data last week faded and ratesensitive sectors such as real estate and utilities came under pressure from higher bond yields.

The STOXX 600 index was down 0.2 as of 0851 GMT, with real estate and utilities sectors losing 1.1 and 0.5, respectively.

Banking shares were a bright spot, rising 0.3.

Euro zone government bond yields extended their rise, with the German 10year bond yield trading at a onemonth high of 2.26, after Friday39;s blowout U.S. labour market data dispelled fears of a recession and spurred a sharp paring of ratecut expectations.

There is hope from the jobs figures that the U.S. won39;t go into recessions. But, at the same time, there39;s disappointment there won39;t be another supersized rate cut, said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

Traders now see a bigger chance of a 25 basispoint Federal Reserve cut rate cut in November, a stark shift from last week when most were betting on a large 50 bps move.

Meanwhile, they have nearly fully priced in another 25 bps cut by the European Central Bank ECB later this month as inflationary pressures are easing faster than policymakers had expected.

The ECB will probably cut rates on Oct. 17 as economic growth is weak and this raises the risk that inflation will undershoot its 2…