European Markets Dropped On Increased Geopolitical Tension

(RTTNews) - The European markets ended Tuesday's session solidly to the downside. Geopolitical concerns dominated the trading day, after Turkey shot down a Russian jet near the border with Syria. The Russian-made SU-24 was reportedly shot down after receiving repeated warnings about entering Turkish air space, although Russia claims the jet remained in Syria for the duration of its flight.

Travel related stocks were again under pressure, as warnings over the potential for further terrorist attacks have resulted in travel warnings. Luxury goods companies were also under pressure. Investors are concerned that reduced travel will translate into lower sales of luxury items to tourists.

U.K. interest rates are likely to remain low for some time, Bank of England Governor Mark Carney said at the Treasury Committee hearing on Tuesday.

"One of the concerns in a low prolonged interest rate environment, which we clearly are in, and are likely to remain for some time, even with limited and gradual rate increases - it still will be a relatively low interest rate environment," Carney said.

In the Inflation Report, the BoE had dampened the prospect of an interest rate hike in the near term, and suggested that interest rates are unlikely to rise until late 2016 as inflation is expected to remain low.

The bank projected the economy to grow 2.7 percent this year and 2.5 percent in 2016. Inflation is forecast to remain below 1 percent until the second half of next year.

The Euro Stoxx 50 index of eurozone bluechip stocks decreased 1.04 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 1.16 percent.

The DAX of Germany dropped 1.43 percent, but the CAC 40 of France fell 1.41 percent. The FTSE of the U.K. declined 0.45 percent and the SMI of Switzerland finished lower by 1.30 percent.

In Frankfurt, Volkswagen was the lone gainer, with an increase of 5.46 percent. There were apprehensions that the emission scandal concerning the company could affect business confidence, which was dispelled by the Ifo business confidence data.

Lufthansa dropped 4.20 percent on a weak day for travel stocks. Air France-KLM also fell 3.86 percent in Paris.

In Paris, LVMH decreased 4.29 percent and Kering weakened by 3.01 percent. L'Oreal also finished down by 2.11 percent.

In London, Babcock International climbed 2.99 percent after its first-half profit increased.

Rolls-Royce gained 3.34 percent. The company expects incremental gross cost savings of 150 million pounds to 200 million pounds per year, with benefits accruing from 2017 onwards, targeting a 1-2 year payback.

Burberry fell 5.01 percent, after Nomura downgraded its rating on the stock to "Neutral" from "Buy."

easyJet surrendered 3.16 percent and Carnival lost 2.47 percent. International Consolidated Air Group also fell 3.26 percent.

Swatch declined 2.29 percent in Zurich. Nomura downgraded the stock to "Neutral" from "Buy."

German business confidence unexpectedly rose in November to its highest level since the middle of last year, offering more evidence that the biggest euro area economy continues to remain unscathed by events such as the Volkswagen pollution cheating scandal and the Paris terrorist attacks.

The business confidence index rose to 109 from 108.2 in October, marking its best reading since June 2014's 109.4, the results of the monthly survey by the Munich-based Ifo Institute showed Tuesday. Economists had expected the index to hold steady after easing in the previous month.

Germany's economic growth slowed as estimated in the third quarter on weak foreign trade and investment, data published by Destatis showed Tuesday. Gross domestic product advanced 0.3 percent from the prior quarter, in line with the preliminary estimate published on November 13. But the pace of growth eased from 0.4 percent expansion seen in the previous quarter.

French manufacturing confidence dropped for the second straight month in November as expected, though slightly, figures from the statistical office Insee showed Tuesday. The manufacturing confidence index fell marginally to 102 in November from 103 in the previous month. The reading was also came in line with expectations.

Economic activity in the U.S. increased by more than previously estimated in the third quarter, according to a report released by the Commerce Department on Tuesday. The report said real gross domestic product climbed by 2.1 percent in the third quarter compared to the previously reported 1.5 percent increase. The upward revision matched economist estimates.

Home prices in major U.S. metropolitan areas rose by more than expected in the month of September, according to a report released by Standard & Poor's on Tuesday. The report said the S&P/Case-Shiller 20-City Composite Home Price Index increased by a seasonally adjusted 0.6 percent in September after inching up by 0.1 percent in August. Economists had expected the index to rise by 0.3 percent.

Consumer confidence in the U.S. has unexpectedly seen a substantial deterioration in the month of November, the Conference Board revealed in a report on Tuesday. The Conference Board said its consumer confidence index tumbled to 90.4 in November from an upwardly revised 99.1 in October.

The steep drop came as a surprise to economists, who had expected the index to climb to 99.6 from the 97.6 originally reported for the previous month.