By Sruthi Shankar and Pranav Kashyap
(Reuters) -European stocks slipped on Tuesday, weighed down by fresh jitters over U.S.-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 0.4%, 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% 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.
“We’re getting a live lesson globally, with the U.S.
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.
U.S. President Donald Trump on Friday threatened to impose 100% tariffs on Chinese goods in retaliation for Beijing’s curbs on rare earth exports.
Though Trump dialed 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%.
The broader auto index dropped 2.5% as Michelin slid 8.9% after it cut its full-year outlook.
German car parts maker Continental dropped 4.3%, while Italian tyre maker Pirelli dropped 1.2%.
On the flip side, Swedish telecoms equipment maker Ericsson soared 18% after it reported a better-than-expected rise in quarterly earnings and played down the impact of U.S.
tariffs.
Overall, third-quarter earnings for STOXX 600 companies are seen dipping 0.2% on average, as per LSEG IBES data published a week ago, a stark contrast with the 12.5% earnings growth expected before Trump announced plans for a wide array of tariffs in February.
Still, it is an improvement from the 0.6% fall analysts expected last month.
Among other stocks, Siemens’ 3.1% 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%, 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.
(Reporting by Sruthi Shankar and Pranav Kashyap in Bengaluru; Editing by Sonia Cheema and Mrigank Dhaniwala)
