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European shares hit 3-week low over UK, France votes

European shares hit three-week lows on Tuesday in volatile trade after Britain’s prime minister called for an early election and the first round of France’s presidential election loomed.

The pan-European STOXX 600 index was down 0.9 percent, while Britain’s FTSE 100 fell 1.3 percent.

The British blue-chip index hit a session-low after Theresa May called for a vote on June 8, saying it was the only way to guarantee political stability as Britain negotiates its way out of the European Union.

A rise in sterling after the announcement weighed on UK equities, though traders said that any weakness in the currency could benefit UK equities going forward.

“We are still bullish on UK equity markets,” John Moore, trader at Berkeley Capital, said.

Europe’s VSTOXX volatility index hit its highest level since December 2016, with first round of the French presidential elections firmly in focus. France’s CAC was down 1.4 percent.

A display showing the German Stock Market Index DAX is pictured at the stock exchange in Frankfurt, Germany, November 9, 2016. (Photo by AFP)

A poll released by Ifop-Fiducial saw centrist Emmanuel Macron leading the first round of the French election with 23 percent, followed closely by far-right Marine Le Pen with 22 percent and far-left Jean-Luc Melenchon with 19.5 percent.

The basic resources sector was the biggest sectoral faller, down 2.8 percent, with analysts saying a slump in iron ore prices was weighing on miners.

Shares in steel miner ArcelorMittal, Anglo American and BHP Billiton fell 3.7 to 6.6 percent.

Oil & gas shares also fell 1.8 percent as the price of oil edged down following an expected climb in US output.

Oil firms Statoil and BP declined 3.6 percent and 2.9 percent respectively.

Jeweler Pandora was the worst performing stock on the STOXX 600, down over 8 percent at its lowest level since August 2015 after Nordic broker Carnegie downgraded the stock to “hold” from “buy”.

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