European Markets React to U.S.-China Trade Tensions and French Political Turmoil

European stocks dipped as trade tensions between the U.S. and China persisted, and France faced political upheaval over pension reforms. The STOXX 600 index fell 0.4% while French stocks closed 0.2% lower. Michelin saw a significant decline, while Ericsson's earnings surpassed expectations, boosting Swedish telecoms showcase.

European stocks took a hit on Tuesday amidst escalating U.S.-China trade tensions and political uncertainty in France, causing the pan-European STOXX 600 index to drop by 0.4%. The decline was aggravated by a sharp fall in Michelin shares as the company revised its full-year outlook downward.

The French political scene added to the market anxiety, as Prime Minister Sebastien Lecornu postponed a key pension reform until after the 2027 presidential election, under pressure from leftist lawmakers. This move came during one of France's most significant political crises in recent decades, affecting bond yields significantly.

Amid these tensions, Ericsson reported an unexpected rise in earnings, sending its stock soaring by 18%. Meanwhile, other sectors struggled, with the auto and mining industries dipping substantially. Threats of new tariffs by the U.S. further impacted investor sentiment, especially for companies reliant on global trade.

(With inputs from agencies.)