FRANKFURT (dpa-AFX) - In the wake of weak U.S. specifications, European utilities continued to come under pressure on Tuesday. On both sides of the Atlantic, rising bond yields weigh on prices. Falling prices, still further rising interest rate expectations and little investor interest in the otherwise "safe haven" in view of smoldering recession risks - in the eyes of many market participants, there are currently a lot of things speaking against the industry, said analyst Sam Arie from the Swiss major bank UBS.

The European sector index lost 2.4 percent in the market-wide Stoxx Europe 600 and reached its lowest level since the end of October 2022. In the weakening Dax, the utilities RWE and Eon as well as the energy technology group Siemens Energy were among the biggest losers, with price reductions of 2.8 to 3.3 percent. The latter has also been suffering for months from ever-increasing costs for technical problems with wind turbines at its subsidiary Siemens Gamesa.

But also in general shares from the renewable energy sector continued to be under selling pressure on Tuesday. UBS expert Arie referred to fragile sentiment, also due to the price slump at Orsted in view of problems with wind turbines in coastal waters. The debates in a number of countries about scaling back environmentally friendly policies are not helping either, he said.

At the MDax end, shares in wind turbine manufacturer Nordex and wind and solar farm operator Encavis fell 4.5 and 4.1 percent, respectively. Solar group SMA Solar held up somewhat better, down 1.4 percent. In the SDax, the shares of Encavis competitor Energiekontor lost 3.8 percent. Fuel cell provider SFC Energy was also among the clear losers, down 2.7 percent.

Apart from Eon, the shares have also lost value since the beginning of the year, in some cases drastically. In contrast, the major European stock indices still show gains for 2023 despite the recent weakness. Market strategists at JPMorgan, meanwhile, see good opportunities after the correction to add to positions in the energy sector that they already recommend. Mislav Matejka's team argues that U.S. bond yields may be close to their peak, and that the regulatory environment for utilities will improve and uncertainty will ease. Valuations have become noticeably more attractive, experts say. And in the medium term, renewables remain a major driver.

UBS expert Arie also sees reason for hope. At some point, bond yields should stop rising, perhaps even decline, leading to a reversal in commodity prices. Then headwinds from the economy could turn into tailwinds in 2024/25. Market strategists at UBS continued to forecast recession risks and falling key interest rates in the coming year. Moreover, according to discussions at an in-house industry conference, he saw little evidence that the fundamentally positive conditions for renewables no longer existed./gl/ag/men