European shares set for first monthly loss in six as bond yields weigh

Sept 30 (Reuters) - European shares were headed for their first monthly decline in six on Wednesday as inflation risks stemming from the Middle East war battered bond markets across the globe, driving borrowing costs higher.

On the day, the pan-European STOXX 600 .STOXX was up 0.7% at 642.69 points by 0722 GMT.

The index is set to end the month with a 1.5% decline and the third quarter, nearly flat.

A surge in global bond yields to multi-decade highs has put pressure on stocks in recent weeks as investors brace for higher interest rates to tame inflationary pressures from surging energy prices.

Oil prices edged higher on Wednesday after US President Donald Trump denied he would be willing to ease sanctions on Iran while Qatar pushed for peace talks. O/R

However, yields took a breather, with the 10-year German bund yield easing for a second day.

Britain's economy grew faster than previously thought in the second quarter, while France's inflation reading for September came in higher than expected.

September inflation data from Germany is due later in the day, which could offer clues into the health of the nation.

Mining shares .SXPP were among the gainers, led by advances in Boliden AB BOL.ST and Rio Tinto RIO.L, while media shares .SXMP were a drag.

Glencore GLEN.L gained 1.4% after the company won approval to continue operations at its Hunter Valley thermal coal project in Australia until 2045.