Europe: Shares fall as Middle East jitters curb risk-taking

EUROPEAN shares declined on Thursday (Oct 3), as investors remained wary of risk-taking amid elevated geopolitical tensions in the Middle East, with most sectors logging declines except energy giants. The benchmark pan-European Stoxx 600 closed 0.9 per cent lower, touching its lowest level in more than a week.

Most regional bourse slipped, with Germany’s DAX and France’s CAC 40 falling more than 1 per cent each.

The automobile sector declined 2.1 per cent with Milan-listed shares of Stellantis down 4 per cent. CEO Carlos Tavares left the door open for possible cuts to its dividend and share buybacks next year.

Barclays also downgraded the Franco-Italian group to “equal-weight”.

Construction and materials shed 2 per cent, bogged down by a 4.8 per cent decline in French firm Bouygues after lowering its 2026 sales and profit expectations.

Basic resources eased 1.7 per cent, tracking declining copper prices in jitters about the conflict in the Middle East.

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Israel, which has been fighting Hamas in Gaza for almost a year, sent its troops into southern Lebanon after two weeks of intense airstrikes, escalating tensions in a conflict that has drawn in Iran and risks drawing in the United States.

Elevated crude prices helped European energy stocks rise 0.3 per cent, a rare bright spot amidst on Thursday’s losses.

On the data front, eurozone business activity slipped back into contraction last month although the downturn was not as steep as initially thought, according to a survey that also showed inflationary pressures had eased.

“Even with the relatively large upward revision the PMI suggests that private sector activity growth in the EZ lost pace at the end of Q3, as the Olympics boost to French services disappeared,” Melanie Debono, senior Europe economist at Pantheon Macroeconomics noted.

Among headlining stocks, Germany’s SAP declined 1.5 per cent following a media report that US prosecutors are broadening a probe into potential price-fixing in government contracts by the software developer and tech reseller Carahsoft. Nestle lost 1.3 per cent after Citigroup cut its rating on the world’s biggest packaged food company to “neutral” from “buy”.

French gaming group FDJ dipped 6.4 per cent on media reports the French government would implement a tax hike on online gaming and betting from 2025, in order to increase the Social Security budget.

Stora Enso gained 3.6 per cent after the Finnish forestry group said it will put 12 per cent of its forest assets in Sweden up for sale in a move to reduce debt and strengthen its balance sheet. REUTERS