EUROPEAN stocks slipped on Tuesday, weighed down by fresh jitters over US-China trade tensions and a sharp drop in Michelin shares, while investors eyed France where the prime minister planned to hit pause on a key pension overhaul.
The pan-European Stoxx 600 index was down 0.37 per cent to 564.54 points, paring some losses after hitting a near two-week low earlier in the session. This follows a short-lived bounce on Monday.
French equities pared the session’s losses to close 0.2 per cent lower.
French Prime Minister Sebastien Lecornu offered to shelve a landmark pension reform until after the 2027 presidential election, caving to pressure from leftist lawmakers in a bid to shore up his fragile political standing.
The yield on the French 10-year bond touched its lowest in over a month.
The move comes as France grapples with its deepest political crisis in decades, with successive minority governments seeking to pass deficit-cutting budgets through a fractured parliament split into three warring ideological camps.
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“We’re getting a live lesson globally, with the US government shutdown and the political instability in France of how life in markets go on.
Markets have made their peace with it and are trading off other drivers right now like the trade war, which may have a more immediate impact on corporate profits,” said Ben Laidler, head of equity strategy at Bradesco BBI.
Third-quarter sales at France’s LVMH, the world’s largest luxury goods group, beat forecasts.
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US President Donald Trump on Friday threatened to impose 100 per cent tariffs on Chinese goods in retaliation for Beijing’s curbs on rare earth exports. Though Trump dialled down the rhetoric over the weekend, tensions lingered as both countries began levying fresh port fees on ocean shippers- a move that could ripple across supply chains, from holiday toys to crude oil. Economy-sensitive miners were down 1.6 per cent.
The broader auto index dropped 2.5 per cent as Michelin slid 8.9 per cent after it cut its full-year outlook. German car parts maker Continental dropped 4.3 per cent, while Italian tyre maker Pirelli dropped 1.2 per cent.
On the flip side, Swedish telecoms equipment maker Ericsson soared 18 per cent after it reported a better-than-expected rise in quarterly earnings and played down the impact of US tariffs.
Overall, third-quarter earnings for Stoxx 600 companies are seen dipping 0.2 per cent on average, as per LSEG IBES data published a week ago, a stark contrast with the 12.5 per cent earnings growth expected before Trump announced plans for a wide array of tariffs in February. Still, it is an improvement from the 0.6 per cent fall analysts expected last month.
Among other stocks, Siemens’ 3.1 per cent drop weighed heavily on the index after Morgan Stanley downgraded the German engineering group to “equal-weight” from “overweight”.
UK-listed budget airline easyJet jumped 8 per cent, with traders citing a report in Italian media of possible interest from global container shipping company Mediterranean Shipping Company, which has denied any involvement in the potential acquisition. REUTERS
