European stocks drop, France in focus

The pan-European STOXX 600 index was down 0.4%, paring some losses after hitting a near two-week low earlier in the session

European stocks slid on Tuesday, weighed down by latest jitters over China-U.S. trade tensions and a sharp drop in Michelin shares, while investors eyed France where the prime minister planned to pause 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 end 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 hit its lowest in more than 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.

Economy-sensitive miners were down 1.6%.

The broader auto index declined 2.5% as Michelin slipped 8.9% after it cut its full-year outlook. German car parts maker Continental shed 4.3%, while Italian tyre maker Pirelli slipped 1.2%.

On the flip side, Swedish telecoms equipment maker Ericsson surged 18% after it reported a better-than-expected increase in quarterly earnings.