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Europe ends under pressure as N. Korea tensions weigh; Aveva shares, oil soars

  • The pan-European Stoxx 600 came off its highs, to end down 0.13 percent, with sectors pointing in different directions by the close.
  • Aveva agreed to combine with Schneider Electric's software business on Tuesday, creating a London-listed firm worth more than £3 billion ($3.88 billion). Aveva's shares soared to close up over 25 percent.
  • Stateside, U.S. stocks traded in the red on the country's first trading day of the week, as tension between North Korea and the West sent jitters down Wall Street.

European markets came under pressure by the end of Tuesday's trade, as a weak performance from Wall Street and geopolitical concerns weighed on investor sentiment.

The pan-European Stoxx 600 came off its highs, to end down 0.13 percent, with sectors pointing in different directions by the close. Autos outperformed other sectors, closing up 0.89 percent overall.

Looking to major bourses, Germany's DAX finished in positive territory, up 0.18 percent, while the U.K.'s FTSE 100 fell 0.52 percent and France's CAC ended 0.34 percent down.

Symbol
Name
Price
 
Change
%Change
Volume
FTSE
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DAX
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CAC
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IBEX 35
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In Europe, banks posted the biggest sector loss on Tuesday, with several Spanish and Italian banks sitting near the bottom of the sector's benchmark. This comes despite UBS strategists upgrading European banks to "overweight", as strategists believe that tapering and a return to EPS growth could act as catalysts to unlocking the group's recovery potential; Reuters reported. Banks closed 1.25 percent down overall.

Looking at individual stocks, Aveva agreed to combine with Schneider Electric's software business on Tuesday, creating a London-listed firm worth more than £3 billion ($3.88 billion). Aveva's shares initially rocketed up almost 30 percent on the news, before finishing trade up 25.7 percent, while shares in Schneider Electric were relatively muted, finishing up 0.26 percent.

Germany's Merck KGaA said it would consider selling its consumer health business. Its shares came off its highs yet finished trade up 2.37 percent.

Meanwhile, French telecom firm Orange and U.K. consumer goods firm Reckitt Benckiser closed near the bottom of the STOXX 600, off 2 percent and 2.7 percent respectively. This comes after Exane BNP Paribas cut its target price on Reckitt Benckiser and cuts its rating on Orange to "underperform".

Oil and gas was the second best performing sector on Tuesday, closing up 0.69 percent. This comes as oil prices posted sharp gains during trade on the back of news that refineries in the Gulf of Mexico - that were shut by Hurricane Harvey - were starting to reopen.

At the market close, Brent was up over 2 percent at $53.64 per barrel, and U.S. crude was at $48.97, up over 3 percent.

Geopolitical tensions

In the aftermath of North Korea's largest-ever nuclear test on Sunday, the U.S. told the United Nations on Monday that Pyongyang was "begging for war," before urging the 15-member Security Council to respond with the "strongest possible measures" against the isolated regime.

Ahead of the emergency UN meeting overnight, South Korea had reported that it had seen signs the North was preparing to launch more missiles in the near future. Consequently jitters in markets worldwide continue to rumble on, with some investors looking to safe-haven assets like the Japanese Yen.

Stateside, Wall Street stocks traded in the red on the country's first trading day of the week, as tension between North Korea and the West sent jitters down Wall Street. The Dow Jones industrial average dropped as much as 170 points before paring some losses by Europe's close.

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ECB on the horizon

On the macroeconomic front, a survey released Tuesday showed that euro zone business activity remained robust in August. This was the latest evidence that appeared to show the bloc's recovery is sustaining its upbeat momentum.

Investors were also looking ahead to a meeting of the European Central Bank on Thursday, where policymakers are poised to decide whether to take action over interest rates as well as its asset purchase program.