Europe close: Stocks retreat from six-week high as risk appetite fades

(Sharecast News) - European stocks snapped a three-day winning streak on Monday as civil unrest and geopolitical uncertainty weighed heavily on investor risk appetite.

The Stoxx Europe 600 index finished the session 0.8% lower at 639.56, pulling back after hitting its highest since 8 September on Friday.

Benchmark indices across London, Paris, Frankfurt, Milan and Madrid all suffered losses of at least 1%.

"Macro risks weighed heavily on investor sentiment. European markets reacted anxiously to scenes of severe civil unrest in several countries, highlighted by French President Emmanuel Macron's address acknowledging "anger and shame" following one of France's worst days of unrest in years," said Patrick Munnelly, partner of market strategy at Tickmill Group.

"Meanwhile, geopolitical tensions spiked as a Ukrainian drone offensive targeting Russian infrastructure set an oil export terminal ablaze in St. Petersburg."

At least 2,400 people have been arrested after a wave of protests across France over the cost of living descended into violence and looting, leaving shops smashed and public buildings burned. Protests also broke out in Spain and Portugal.

The turmoil hit 10-year French government bonds, with the yield surging 14.5 basis points to 4.931% and the spread with safer German bonds out to around 145 basis points, reflecting investor concerns over France's fiscal and political outlook. The euro was 0.29% down against the dollar to $1.1206.

In equity news, French stocks were under pressure, with supermarket chain Carrefour and shopping centre developer Klepierre both down after the weekend's looting and vandalism. Carrefour was also in the news after agreeing to snap up wholesale business Codifrance in a �152m deal.

Germany's Merck was flat after announcing it would take over US-listed British biotech Silence Therapeutics in a $1.3bn deal.

In the UK, Barclays was under the cosh following a report the Bank of England is examining whether the bank's traders misrepresented illiquid private credit loans to understate their risk after concerns were raised by an insider.