LONDON, May 12 (Reuters) - European shares fell sharply in early trading on Tuesday, as a further sell-off in global bond markets rattled investors.
German Bund yields rose. Analysts have said the sell-off was partly sparked by an uptick in inflation expectations amid a rise in oil prices and uneasiness with record low yields.
But the full picture is far from clear. Yields continue to rise despite oil prices dipping, investors are selling German Bunds despite renewed worries over Greece.
"It's a matter of concern for the market. When any particular asset class goes through periods of extreme volatility in a short space of time, people feel the pressure to take their risk exposure lower. Of course, there is an overlap from what may be a bond market event into the equity space," Ian Richards, global head of equities strategy at Exane BNP Paribas, said.
The pan-European FTSEurofirst 300 index was down 1,2 percent at 1,577.10 points by 0726 GMT.
Reporting by Atul Prakash, editing by Nigel Stephenson