(Bloomberg) -- European equities declined for a third day amid concerns about an escalation of Russia’s war in Ukraine.
The Stoxx Europe 600 Index fell 1% by 11:31 a.m. in London to trade at lowest level since Aug. 13. All sectors were in the red, led lower by automakers and banks. Italian shares underperformed, dragged down by the country’s biggest lenders.
Stocks pulled back from session highs after President Vladimir Putin approved an updated nuclear doctrine that allows Russia to expand its use of atomic weapons, days after the US gave Ukraine limited permission for long-range missile strikes on Russian territory. Ukrainian armed forces carried out their first strike in a border region within Russian territory with ATACMS missile. Government bonds rose along with the yen and other haven assets.
“It’s clearly not good at all,” Andrea Tueni, head of sales trading at Saxo Banque France. “The situation can get worse before it gets better in the weeks to come so it’s really something for investors to keep in mind.”
Meanwhile, concerns about potential tariffs and other policies that Donald Trump may impose during his second term in the White House have put pressure on European equities, which have posted four straight weeks of declines. A surging dollar, China’s economic slowdown and the region’s own anemic economy are also adding to pressures.
“We expect the geopolitical tensions to be short-lived for now,” said Joachim Klement, head of strategy, economics and ESG at Panmure Liberum. “Investors shouldn’t read too much into the Kremlin’s change in nuclear policy. The tensions between Russia and the West are in a holding pattern since Putin has no incentive to escalate the situation until Donald Trump comes into office.”
Among individual moves, Siemens AG shares dropped after Bank of America downgraded its rating to neutral. Nestle SA declined as investors regard the Swiss foodmaker’s updated guidance as still too ambitious after its troubled year.
For more on equity markets:
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- US Stock Futures Little Changed; Incyte Falls
- November Rains on UK House Prices: The London Rush
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--With assistance from Michael Msika.
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