European markets struggle for momentum amid rising U.S. bond yields

LONDON — European stocks were trading slightly higher on Wednesday as global markets keep an eye on U.S. bond yields.

The pan-European Stoxx 600 index struggled for momentum, trading up 0.1% with most sectors in positive territory apart from utilities, technology, media, financial services and food and beverages.

Online supermarket Ocado was the best performer on the index, up 5%, while Vitrolife was the worst performer, down 4%.

European markets are following the broadly negative trend set in Asia-Pacific overnight, where investors are closely monitoring interest rates in the bond market, with U.S. Treasury yields rising at the fastest new year pace in two decades. The benchmark 10-year U.S. Treasury yield rose to as high as 1.71% on Tuesday, last sitting at 1.6455%.

The 10-year yield is important since it influences lending rates for mortgages and many other business and consumer loans. When bonds sell off, yields, or interest rates, go higher.

Investors are waiting for the release of the Federal Reserve's minutes from its December meeting on Thursday. The central bank announced last month that it would speed up the tapering of its bond buying program and also forecast three interest rate hikes for 2022.

Meanwhile, U.S. stock futures were flat in overnight trading Tuesday after the Dow Jones Industrial Average notched a record close as investors flocked to shares that stand to benefit from an economic recovery.

Data releases in Europe on Wednesday include final PMI (purchasing managers' index) data for the euro zone's services and manufacturing industries in December and Italian consumer confidence data or December.

— CNBC's Yun Li, Patti Domm and Eustance Huang contributed to this market report.