European stocks fell and government bonds gained on Tuesday, as investors responded to the latest escalation of the war in Ukraine. The pan-continental Stoxx Europe 600 index was 0.7 per cent lower by early afternoon trading. Germany’s Dax was down 1 per cent and France’s Cac 40 fell 1.1 per cent. On Wall Street, the S&P 500 erased most of its early losses to trade 0.1 per cent lower by mid-morning.
” Sectors such as retail and banking, which are sensitive to concerns about the economy, were a drag on European indices. However, defence stocks rose; shares in Saab of Sweden and Rheinmetall of Germany were up more than 4 and 3 per cent respectively. In bond markets, the yield on benchmark 10-year US Treasuries fell 0.04 percentage points to 4.37 per cent while German yields also declined. Yields fall when prices rise.