European shares fall as French stocks plunge after government's collapse (updated)
06/10/2025 09:39
French stocks, bonds slide after PM resigns UK's Mondi down as profit growth slows STOXX flat after climbing nearly 3% last week Updates with closing levels By Shashwat Chauhan, Amir Orusov and Pranav Kashyap Oct 6 (Reuters) - European stocks recouped their losses on Monday after the fall triggered by the unexpected resignation of French Prime Minister Sebastien Lecornu was offset by a rally in semiconductor stocks following AMD's chip supply deal with OpenAI. The pan-European STOXX 600 .STOXX closed flat. The index briefly hit an intraday record high on Monday after climbing more than 2.8% last week. French stocks .FCHI tumbled 1.4%, marking their steepest one-day drop since August and snapping a six-day winning streak, after Lecornu abruptly resigned just hours after unveiling his new cabinet. French bond yields spiked, with the 10-year note hitting a one-week high, while the euro weakened. LUXURY STOCKS AND BANKS TAKE HIT Investors remain wary of France's fiscal health, as the country holds the euro zone’s largest budget deficit - nearly double the EU's 3% threshold. French luxury stocks took a hit, with LVMH LVMH.PA, EssilorLuxottica ESLX.PA, and Hermes HRMS.PA sliding over 2.3% each. Banks also bore the brunt, with SocGen SOGN.PA and BNP Paribas BNPP.PA plunging 3.2% and 4.2% respectively. Mid-cap French stocks .CACMD fell 1.7%. Political instability has plagued France since President Emmanuel Macron's 2022 re-election, with no party commanding a parliamentary majority. "The political turmoil in France isn't new. It's just another confirmation of the fragility within the political system in France and how hard it is for them to be able to maintain a government," said Daniela Hathorn, senior market analyst at Capital.com. French blue-chips have lagged European peers so far this year, up over 7% compared to double-digit gains seen in most developed countries. On the European markets more broadly, oil and gas .SXEP gained 1.3% tracking higher oil prices after OPEC+'s planned production increase for November was more modest than expected. European semiconductor companies rose after AMD's AMD.O chip supply deal with OpenAI. BESI BESI.AS jumped 12.4% while ASML ASML.AS rose 2%. Wall Street brokerage JPMorgan upgraded its stance on the euro zone to "overweight" from "neutral", noting that the equities in the region have become more attractive after several months of underperformance and policy support. Among other moving stocks, SEB SEBF.PA slid 21.4% after the French kitchenware maker cut its annual sales and profit forecast. Mondi MNDI.L dropped 16% after the British packaging and paper firm said its core profit growth slowed in the third quarter due to weak demand and lower prices. France lags as political turmoil weighs https://reut.rs/4q1Ku7a (Reporting by Shashwat Chauhan and Pranav Kashyap in Bengaluru and Amir Orusov in Gdansk; Editing by Harikrishnan Nair) ((Shashwat.Chauhan@thomsonreuters.com ; Amir.Orusov@thomsonreuters.com))