European stock markets reopened their doors on Monday after the three-day Easter holiday and traded lower as investors eyed geopolitical tensions. Nearing midday trade in Europe, the benchmark Euro Stoxx 50 fell 0.89%, France's CAC 40 lost 1.25%, while Germany's DAX 30 traded down 0.67%.
Tension surrounding North Korea has mounted over the past week as U.S. President Donald Trump has taken a tough rhetorical line with Pyongyang, dampening demand as risk-off sentiment takes hold.
U.S. Vice President Mike Pence's visit to South Korea resulted in both countries' pledge to forge a stronger alliance and cooperate with China to rein in North Korea, which has vowed to conduct more tests following Sunday's failed missile launch. Pence warned North Korea on Monday that recent American military strikes in Syria and Afghanistan showed President Donald Trump's resolve should not be questioned.
Closer to Europe, lingering worries about the upcoming French presidential elections on April 23 further added to investors' desire to take risk off the table. As the first round of voting looms, only a few percentage points are separating the four main candidates. Markets are focused on far-right and far-left candidates Marine Le Pen and Jean-Luc Melenchon, as both have promised to reevaluate France's relationship with the European Union.
Polls widely expect the voting to pass to a second round scheduled for May 7, where the eurozone's second largest economy will choose between the two leading candidates from the first round. Centrist Emmanuel Macron is widely predicted to win the final vote, but surprise outcomes in both the U.K.'s Brexit vote and the U.S. presidential elections have kept markets on edge.
French France 10-Year inched up on Tuesday, with the spread on the benchmark Germany 10-Year widening as investors showed nervousness in the run-up to the elections.
Markets were also on edge as U.K. Prime Minister Theresa May surprised investors by scheduling a statement at Downing Street for 6:15 AM ET (10:15 GMT). The location is usually used for important announcements, sparking a wide array of speculation, including snap elections, that sent the pound lower.
On the economic front, there were no major European data releases, though the International Monetary Fund (IMF) was scheduled to release its latest projections for the world economy at 9:00 AM ET (13:00 GMT).
In company news, Post Holdings (NYSE:POST) agreed to shell out £1.4 billion ($1.76 billion) to acquire Britain's Weetabix from Chinese conglomerate Bright Foods. America's third-largest cereal company reportedly beat out other bidders including AB Foods (LON:ABF) or Cereal Partners, a joint venture between Nestle (OTCPK:NSRGY) and General Mills (NYSE:GIS).
Meanwhile, oil prices continued lower on Tuesday as European traders returned to their desks from the Easter holiday. Investors began to take profits after a three consecutive weekly gains as a report ahead of the holidays showed that U.S. drilling activity continued to be on the rise.
Oilfield services firm Barker Hughes reported last week that its U.S. rig count rose by 11 to 683. That was the thirteenth straight weekly increase to its highest level in nearly two years. Energy stocks were mostly lower, as French oil and gas major Total SA (TOT, PA:TOTF) fell 1.31% and Italy's ENI (MI:ENI) lost 1.33%, although Norwegian rival Statoil (STO, OL:STL) slumped 2.81%.
Financial stocks traded down, as French lenders BNP Paribas (OTCQX:BNPQF, PA:BNPP) and Societe Generale (OTCPK:SCGLF, PA:SOGN) lost 1.37% and 1.43%, respectively, while Germany's Commerzbank (OTCPK:CRZBF, DE:CBKG) and rival Deutsche Bank (DB, DE:DBKGn) rival fell 1.93% and 2.15%, respectively.
Among peripheral lenders, Italy's Intesa Sanpaolo (OTCPK:IITOF, MI:ISP) fell 1.39% though Unicredit (OTCPK:UNCFF, MI:CRDI) gained 0.78%, while Spanish banks Banco Santander (SAN, MC:SAN) and BBVA (BBVA, MC:BBVA) traded down 1.34% and 0.40%, respectively.
In London, the commodity-heavy FTSE 100 slipped 0.02%, pressured by losses in mining stocks on falling metal prices. Shares in Glencore (OTCPK:GLCNF, LON:GLEN) slumped 2.44%, Anglo American (OTCQX:AAUKF, LON:AAL) sank 2.91%, while BHP Billiton (BHP, LON:BLT) traded down 2.92% and Rio Tinto (RIO, LON:RIO) was off 2.18%.
Financial stocks were also lower, with shares in HSBC Holdings (HSBC, LON:HSBA) down 1.15%, while the Royal Bank of Scotland (RBS, LON:RBS) lost 1.62%. Lloyds Banking (LYG, LON:LLOY) and Barclays (BCS, LON:BARC) traded down 0.62% and 2.87%, respectively.
In the U.S., futures pointed to a lower open. The Dow Jones Industrial Average futures fell 0.23%, S&P 500 futures lost 0.28%, while the Nasdaq 100 futures dropped 0.16%.