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Europe ends in the red as North Korea tensions weigh on sentiment; Gemalto sinks 10%

  • The pan-European Stoxx 600 closed down 0.52 percent, with most sectors closing in negative territory, with the exception of autos.
  • Biggest movers: Gemalto slumped 10 percent after Deutsche Bank, Kepler Cheuvreux and Invest Securities cut their target price for the firm. Meanwhile, Victrex soared 8.5 percent.
  • Markets remain on edge after North Korea conducted its sixth and most powerful nuclear test to date on Sunday.

European markets failed to lift themselves out of the red on Monday, after North Korea's latest nuclear test prompted investors to rush to safe-haven assets.

The pan-European Stoxx 600 closed down 0.52 percent, with most sectors closing in negative territory, with the exception of autos and oil.

Looking to individual bourses, the U.K.'s FTSE 100 finished down 0.36 percent, while the French CAC and German DAX followed a similar pattern, ending down 0.37 percent and 0.33 percent respectively.

Symbol
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Price
 
Change
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FTSE
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DAX
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CAC
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IBEX 35
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Technology stocks were one of the worst performers Monday, ending down 0.9 percent as a sector overall. Gemalto slumped to the bottom of the benchmark after Deutsche Bank, Kepler Cheuvreux, and Invest Securities cut their target price for the Dutch digital security firm. Its shares ended down 10 percent.

Fiat Chrysler also slipped into negative territory on Monday, falling 1.27 percent by the close. This comes after Chief Executive Sergio Marchionne said he had not received any offers for the car maker.

Switching to the opposite side of the spectrum, specialty chemicals maker Victrex popped 8.5 percent, after the company said that it expected its tax rate to be "materially lower than previous guidance". Numis, Jefferies, Credit Suisse and N+1 Singer also raised their target price on the stock.

Elsewhere, pharma heavyweight Novartis ended the trading day under pressure, off 0.99 percent. The group announced that its Chief Executive Joseph Jimenez would retire in 2018, with drug developer Vasant Narasimhan due to take over from February next year.

Market jitters

On Sunday, North Korea conducted its sixth and most powerful nuclear test to date, which it claimed was of an advanced hydrogen bomb for a long-range missile.

In response to Pyongyang's test, South Korea carried out a live-fire exercise simulating an attack on North Korea. The missile drill saw ballistic missiles launched from fighter jets and from the ground. It came as U.S. Defense Secretary James Mattis warned that any threat from North Korea towards the U.S. or its allies would be met with a "massive military response."

The Japanese yen, gold, spot silver and sovereign bonds all rose during Asian and European trade as growing international unease caused a typical knee-jerk shift to save havens.

Consequently, precious metal miners Randgold Resources, Polymetal International and Fresnillo all posted strong gains of 2 percent or more by the end of the session. Several oil and gas majors posted solid gains as well, despite the volatility in the energy market.

Europe in the spotlight

When it comes to European politics, Germany will be of key importance to investors over the coming weeks as the country heads to the polls for its general election, due at the end of September.

On Sunday, Chancellor Angela Merkel appeared to hold her ground in a live television debate against political rival Martin Schulz. A poll by Infratest Dimap showed on Monday that Merkel had emerged as the clear winner, as her overall performance in the debate was viewed as more convincing by 55 percent, compared to 35 percent for Schulz.

Looking ahead, investors in Europe will be turning their attention to the European Central Bank for its next monetary policy meeting due on Thursday.

After ECB President Mario Draghi gave no clues away at Jackson Hole as to what to expect from the central bank's strategy going forward, investors will be looking at the bank's rhetoric, with market-watchers having previously expected that the bank would announce its plans to reduce its bond-buying program in September.

Elsewhere, U.S. markets are closed for Labor Day on Monday.

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