9-26-17 12:15 PM EDT | Email Article

By Sara Sjolin, MarketWatch

Euro sinks to 10-week low against the pound

European stocks ended mixed on Tuesday as the euro softened a second straight session following Germany's general election on Sunday and as traders got the first opportunity to react to the latest threat of armed conflict in the Korean Peninsula.

The Stoxx Europe 600 index ended marginally higher at 384.03, after swinging between small gains and losses throughout the day.

Most country-specific indexes were also volatile after North Korea's foreign minister late in Monday's session claimed the U.S. has declared war on the isolated state (http://www.marketwatch.com/story/north-korean-official-says-us-has-declared-war-2017-09-25-13103598).

That has left Pyongyang with "every right to make countermeasures, including the right to shoot down U.S. strategic bombers, even if they are not yet inside the airspace border of our country," the foreign minister said.

"European equity markets are still suffering from low volatility. Trading ranges have been low because investors are cautious of geopolitical risks such as North Korea, the German election and the Catalonian independence referendum," said David Madden, market analyst at CMC Markets UK, in a note.

"These issues are hanging over the markets and the impact is a lack of bullishness rather than out and out fear. It is as if dealers are content to remain in wait and see mode," he added.

Euro selloff: The euro slumped to a 10-week low against the pound, fetching GBP0.8772, down from GBP0.8798 late Monday in New York. Against the dollar, the euro dropped to $1.1773 from $1.1850 on Monday.

The euro also declined Monday after Germany's election on Sunday where Chancellor Angela Merkel's conservative alliance secured a fourth term in power, but nonetheless registered a sharp drop in her party's overall support. Instead, the anti-immigrant and euroskeptic Alternative for Germany saw a big increase in votes and won seats in the Bundestag for the first time.

"Merkel now faces tough and potentially protracted coalition talks. Her weakened position is likely to limit the degree of support she can offer France's Macron as he attempts to move towards closer integration for the EU," said analysts at Rabobank in a note.

Read:How Merkel's choice of partner could set the tone for the euro (http://www.marketwatch.com/story/dont-call-the-german-election-boring-it-could-mean-a-huge-shift-for-the-eurozone-2017-09-18)

(http://www.marketwatch.com/story/dont-call-the-german-election-boring-it-could-mean-a-huge-shift-for-the-eurozone-2017-09-18)Meanwhile, euro investors were also fretting about an independence referendum in the Spanish region of Catalonia (http://www.marketwatch.com/story/german-election-result-revives-eurozone-jitters-as-investors-turn-attention-to-spain-2017-09-25) on Sunday, although the central government in Madrid has declared the vote illegal.

Indexes: Spain's IBEX 35 index ended 0.3% lower at 10,189.60 on Tuesday, while Germany's DAX 30 index gained 0.1% to 12,605.20.

France's CAC 40 index closed marginally higher at 5,268.76, and the U.K.'s FTSE 100 index fell 0.2% to 7,285.74 (http://www.marketwatch.com/story/ftse-100-heads-lower-as-north-korea-tensions-persist-2017-09-26).

Stock movers: Shares of Nestlé SA (NESN.EB) (NESN.EB) climbed 1.8% after the consumer-goods giant said it would accelerate its share buyback plan (http://www.marketwatch.com/story/nestle-to-accelerate-share-buybacks-2017-09-26) and confirmed its 2020 organic-growth target.

Carnival PLC (CCL.LN) (CCL) rose 2.7% after the cruise company reported third-quarter earnings and revenue that beat expectations (http://www.marketwatch.com/story/carnival-shares-rise-after-earnings-and-revenue-beat-expectations-2017-09-26).

Shares of Informa PLC (INF.LN) lost 1% after the events and publishing company said it has taken over open access publisher Dove Medical Press for an undisclosed sum (http://www.marketwatch.com/story/informa-in-deal-to-buy-dove-medical-press-2017-09-26).

Adidas AG (ADS.XE) (ADS.XE) lost 2.4% after the U.S. Federal Bureau Investigation said a probe into corruption in college basketball resulted in the arrest of 10 people, including James Gatto (http://www.marketwatch.com/story/adidas-shares-fall-after-exec-jim-gatto-arrested-in-fbi-corruption-probe-2017-09-26), Adidas's director of global sports marketing

 

(END) Dow Jones Newswires

September 26, 2017 12:15 ET (16:15 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.
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