European stocks down as French unrest rattles investors

FRANKFURT: European shares ended just a touch lower on Tuesday, as violent protests in France kept risk appetite in check and hammered equities in the euro zone’s second-biggest economy.

The protests, which have intensified pressure on a country already grappling with soft economic growth and ballooning government debt, sent France’s benchmark CAC 40 index 0.38 percent lower.

The pan-European STOXX 600 index dipped 0.14 percent to 638.64 points after slipping 0.8 percent in the previous session.

Investors weary of elevated oil prices and high government bond yields have relied on robust earnings to pluck the STOXX 600 out of the narrow range it has been stuck in over the past month.

“You can have a lot of headwinds but earnings growth can still drive the day. The current season has been one of the best quarters for earnings per share growth in Europe in many years,” said Burns McKinney, managing director and senior portfolio manager at NFJ Investment Group.

But the turmoil in France has added another risk, especially as presidential elections are due in six months.

“It’s tough for investors to get particularly emboldened by Europe now,” said Neil Wilson, investor strategist at Saxo UK.

“How much exposure do you want to Europe right now when you’re not really sure what sort of policies are going to be pursued by government over the next few years, and France being the focal point for that?”

Several major European sectors were trading lower, with industrials leading declines, dragged down by ABB’s 5 percent drop as nervousness about the sustainability of AI investments weighed on the Swiss engineering company, which is a major supplier to data centres.

French cloud operator OVHcloud jumped 18 percent to a near one-month high after reporting its first positive levered free cash flow since its 2021 listing.

Comet Holding jumped 4.7 percent following an increase in the electronic equipment maker’s third-quarter sales due to expansion of data centres and AI infrastructure.

Schneider Electric fell 3.3 percent after the French electrical equipment maker raised €6 billion (USD6.74 billion) in an accelerated bookbuild, a fast share sale to institutional investors.