Europe midday: Stocks sag amid geopolitical tensions

Stock markets across Europe fell after the latest flare-up in tensions between China and the US after Washington gave Beijing three days to shut its consulate in Houston "to protect American intellectual property and Americans’ private information."

Only the day before, US Secretary of State, Mike Pompeo, and Foreign Secretary, Dominic Raab, announced their intention to build a "coalition" that understood the threat from China.

The risks stemming from growing frictions between the two powers, not least due to Beijing's handling of the novel coronavirus pandemic in its early stages, are increasingly a source of concern for many analysts.

Geopolitical concerns in markets came on top of simmering concerns regarding the need for sustained policy support for the economy given the possibility of a drawn out

As of 1234 BST, the pan-European Stoxx 600 was down 0.87% at 373.43, alongside a 0.32% dip for the German Dax to 13,128.15 while the FTSE Mibtel was off 0.77% at 20,564.42.

Travel & Leisure stocks were hit hardest, with the Stoxx 600 sub-index down 2.39% alongside a 1.98% drop for the Autos & Parts sector.

Euro/dollar meanwhile was again flying in the background, climbing 0.43% to 1.1577, as the US dollar spot index fell towards technical support at its 52-week lows.

The move came alongside big gains in silver and gold futures, as investors sought ought safe havens, with the former surging by over 5% to $22.65/oz.

Front month Brent crude oil futures on the other hand were down 1.5% at $43.66 a barrel on the ICE - despite the retreat in the Greenback.

No major economic releases were scheduled for Wednesday with investors waiting on the latest quarterly results from Microsoft and Tesla which were due out after the close of trading in New York.

"We still have to watch the risk of increasing stress during the second, more drawn out phase of the ongoing tick-shaped recovery," Kallum Pickering at Berenberg said in a research note sent to clients.

"Even if the virus remains under control and major economies avoid renewed national lockdowns, nervous businesses and households may continue to maintain high precautionary cash balances instead of spending with confidence."