European shares slip as France unrest dents sentiment

[BENGALURU] French equities suffered their worst day in nearly two weeks on Monday (Oct 19), weighing on European shares after rioting erupted in cities across the country over the weekend.

France’s blue-chip CAC 40 index fell 1.1 per cent, while the pan-European Stoxx 600 index slipped 0.9 per cent to 639.1 points.

Triggered by rising prices and worsening public services, the protests have soured investor sentiment towards a country already grappling with weak growth and rising debt.

The turmoil in the eurozone’s second-largest economy, which adds to political uncertainty ahead of the presidential election in 2027, has also been partly responsible for keeping the Stoxx 600 index stuck within a narrow range over the past month.

“There is clearly political risk and that is going to mean you get near-term volatility,” said Kiran Ganesh, a multi-asset strategist at UBS Global Wealth Management.

French lenders BNP Paribas, Societe Generale and Credit Agricole fell between 2.5 per cent and 3.4 per cent.

Retailer Carrefour declined 2.2 per cent and shopping mall operator Unibail-Rodamco-Westfield dropped 2 per cent.

Spain’s political risks spark caution

Political uncertainty also came to the fore in Spain, where the equities benchmark fell 1.5 per cent.

A snap election scheduled for November has left investors wary.

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Spain’s hard-left parties on Saturday presented separate candidate lists for the election, reducing Socialist Prime Minister Pedro Sanchez’s chances of staying in power at the head of a leftist coalition.

“Spain faces its own political constraints around budgets and fiscal reforms, although stronger economic growth provides some protection,” said Daniela Hathorn, senior market analyst at Capital.com.

Cyclical sectors led declines across Europe, with banks the biggest laggards following a 2.2 per cent decline.

Defence stocks also came under pressure, falling 1.5 per cent.

The technology index was the only major sector in positive territory, rising 0.7 per cent.

Last week, European shares held up better than US peers during a sell-off in artificial intelligence-linked stocks over concerns about rising debt to fund infrastructure spending.

Investors were also awaiting earnings from European and US blue-chip companies.

Software maker SAP, British lender Barclays and telecom equipment maker Nokia are scheduled to report later this week.

In the US, results from Meta Platforms and chip firms could provide fresh direction for equity markets.

Among individual movers, Barclays dropped 3.5 per cent to hit its lowest level since mid-June.

The Bank of England is examining whether Barclays traders misrepresented illiquid private credit loans to understate their risk after an insider at the British bank raised concerns, the Financial Times reported, citing people familiar with the matter.

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