European stocks fall as French unrest spreads

The pan-European Stoxx 600 index extended its decline on Tuesday, dropping 0.42% to 636.9 points by mid-morning as investor sentiment soured amid widening civil unrest across the continent and spreading demonstrations from Paris to Rome.

Regional benchmarks retreat

Germany’s DAX 40 fell 0.66% to 25,150, while Italy’s FTSE MIB 30 lost 0.59% at 48,803. France’s CAC 40 slipped 0.31% to 7,845, Spain’s IBEX 35 edged down 0.08% to 19,024, and the UK’s FTSE 100 retreated 0.28% to 10,734.

Unrest spreads beyond France

French Prime Minister Sebastien Lecornu instructed local authorities to impose partial curfews on Monday in select areas to contain the disorder. The government in Paris announced a special support fund to help municipalities rebuild damaged public property, while truck drivers in southern Italy blocked roads and ports to protest rising fuel costs. US President Donald Trump blamed "migrants, jihadists, and communists" for the unrest while speaking at a Kansas rally on Monday, having earlier stated that the "very sad situation (...) has to do with immigration, not schools, not anything."

Bond yields climb

France’s 10-year bond yield rose 14 basis points to 4.94%, pushing the spread between French and German 10-year bonds to 148 basis points as investors priced in heightened political risk. The euro maintained its recovery against the US dollar despite the turbulence, climbing 0.2% to 1.1234.