European shares slip as France unrest dents sentiment

By Avinash P and Niket Nishant

Oct 19 (Reuters) - ‌French equities suffered their ​worst ​day in nearly two weeks on Monday, weighing on European shares after rioting erupted in cities across the country over the weekend.

France's blue-chip CAC 40 index fell 1.1%, while the ‌pan-European STOXX 600 index slipped 0.9% to 639.1 points.

Triggered by rising prices and worsening ⁠public services, the protests have soured investor sentiment towards a country already grappling with weak growth and rising debt.

The turmoil in ‌the euro zone's second-largest economy, which ‌adds to political uncertainty ahead of the presidential election in 2027, has also been partly responsible for keeping the STOXX 600 index stuck within a narrow range over the past month.

"There is clearly political ​risk and that is going to mean you get near-term volatility," said Kiran Ganesh, a multi-asset strategist at UBS Global Wealth Management.

French lenders BNP Paribas, Societe Generale and Credit Agricole fell between 2.5% ⁠and 3.4%. Retailer Carrefour declined 2.2% and shopping mall operator Unibail-Rodamco-Westfield dropped 2%.

SPAIN'S POLITICAL RISKS SPARK CAUTION

Political uncertainty also came to the fore ​in Spain, where the equities benchmark fell 1.5%. A snap election scheduled for next month has left investors wary.

Spain's hard-left parties on Saturday presented separate candidate lists ​for the election, reducing Socialist Prime Minister Pedro Sanchez's chances ‌of staying in power at the head of a leftist coalition.

"Spain faces its own political constraints around budgets and fiscal reforms, although stronger economic growth provides some protection," ⁠said Daniela Hathorn, senior market analyst at Capital.com.

Cyclical sectors led declines across Europe, with banks the biggest laggards following a 2.2% decline. Defence stocks also came under pressure, falling 1.5%.

The technology index was the only major index in positive ⁠territory, rising 0.7%. Last week, European shares held up better than US peers during a selloff in AI-linked stocks over ​concerns about rising debt to fund infrastructure spending.

Investors were also awaiting earnings from European and US blue-chip companies.

Software maker SAP, British lender Barclays and telecom equipment maker Nokia are scheduled to report later this week.

In the US, results from Meta ‌Platforms and chip firms could provide fresh direction for equity markets.

Among individual movers, Barclays dropped 3.5% to hit its lowest since mid June.

The Bank of England is ‌examining whether Barclays traders misrepresented illiquid private credit loans to understate their risk after an insider at the British ⁠bank raised concerns, the Financial Times reported, ‌citing people familiar with the matter.

Norway's ​Mowi gained 3.5% after the salmon producer's third-quarter harvest volumes hit an all-time high.

(Reporting by Avinash P and Niket Nishant in Bengaluru; Editing by Mrigank Dhaniwala, Sonia Cheema and ‌Sahal Muhammed)

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