Europe midday: Shares, euro fall on higher French yields amid political turmoil

(Sharecast News) - European shares were lower at midday on Monday as political unrest in France over plans to cut public spending sent bond yields higher and hit the euro.

The pan-regional Stoxx 600 index was down 0.78% at 1057 GMT, with France's CAC 40 declining by 1.36%. In Italy, where police also clashed with protestors in Milan, the MIB was down 1.50%.

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 rising 10 basis points to 4.89% and the spread with safer German bonds out to around 146 basis points reflecting investor concerns over France's fiscal and political outlook. The euro was 0.16% down against the dollar to $1.122.

"Investors worried about political flashpoints will be watching France nervously. Given the country's precarious financial situation, the riots of recent weeks may only be a foretaste of what is to come should any government attempt to reform public spending," said Chris Beauchamp, chief market analyst at investing and trading platform IG.

"While other European markets enjoyed a stronger period last week, the CAC continued its miserable performance. But betting on France's recuperative powers has been the way to go in previous crises - can the Fifth Republic pull off a similar trick again?"

Elsewhere, oil prices slid as US President Donald Trump seemingly decided to side with Russia in its war against Ukraine and waive bi-partisan legislation that would impose further sanctions on Moscow.

Brent crude fell 2.38% to $107 a barrel while West Texas Intermediate was down 1.83% to $99.55.

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 also revealed it had struck a deal with Colruyt Group to acquire local food retail company Codifrance for �152m.

Reporting by Frank Prenesti for Sharecast.com