By Ankika Biswas, Joao Manuel Vicente Mauricio and Pranav Kashyap
(Reuters) -Europe’s main stock index hit a three-month low on Tuesday as escalating geopolitical tensions, fueled by Russia lowering the threshold for a nuclear attack, prompted investors to flock to safer havens.
The pan-European stock closed 0.4% lower, after falling 1% to its lowest since August 8 earlier in the session. It posted a third straight day of losses.
Poland, which borders Ukraine, saw its blue chip index, WIG20, fall more than 3%, falling the most among regional indexes in Europe.
Safe haven assets such as gold and the US dollar were on the rise. [FRX/][GOL/]
The Kremlin said the purpose of the updated nuclear doctrine was to make potential enemies understand the inevitability of Russian retaliation for an attack.
“Every country wants to avoid nuclear war, but the fact that we have seen Putin take steps toward that possibility has created a risk-off or a safe haven,” said Daniela Hathorn, senior market analyst at Capital.com
“It’s clear that people are looking for ways to park their money safely, at least for now, but we’re not there yet in terms of panic or a significant sell-off.”
The Euro STOXX Volatility Index closed at 19.23, having reached 21.40 earlier in the day – close to this month’s highest level, signaling rising investor concerns.
Stocks linked to consumer goods, often linked to disposable income, fell.
Cars and luxury stocks were the losers in the top sector. Both fell by more than 1.1% each.
including names like UniCredit and Raiffeisen that are sensitive to Russia, fell 1.4%, making it the hardest-hit sector in a general market decline.
The upcoming appointments of a U.S. Treasury secretary and a trade representative under newly elected President Donald Trump are also in the spotlight following last week’s picks for health care and defense roles.
Investors are starting to question the impact of possible inflationary policies from Trump, such as potential tax cuts, while also awaiting earnings from AI chip leader Nvidia (NASDAQ:) on Wednesday, said Richard Hunter, head of markets at Interactive Investor.
With ECB policymakers raising concerns about potential US trade tariffs that could hurt eurozone growth, any signals on the global rate-cutting path will be closely watched.
Trump’s policies could complicate the prospects for further US interest rate cuts.
Among the individual shares is Rhinemetal (ETR:) gained 3.8% after the defense group said it targets revenues of 20 billion euros ($21.08 billion) by 2027.
Diploma Plc fell 8% after the tech products and services provider missed full-year revenue estimates.
Caixabank lost 5.3% after the bank presented its new strategic plan 2025-2027.
Nesting (NS:) fell by 1.9%. The food giant wants to boost advertising and marketing, cut costs by $2.8 billion by 2027 and spin its water and premium drinks businesses into a standalone global entity.
Shares of Aeroports de Paris rose 3.4% after Stifel upgraded the French airport operator’s shares from ‘hold’ to ‘buy’.
