Europe open: Shares fall as Israel invasion of Lebanon hits sentiment

European shares continued their retreat at the open on Tuesday as Israel’s invasion of Lebanon dented investor sentiment amid fears of a major escalation of conflict in the Middle East.

The pan-regional Stoxx 600 index was down 0.08% to 522.48 as the benchmark index drew back from record highs, despite an 8% surge in Chinese markets overnight on continued support for the government’s recently-announced stimulus measures. US markets also closed higher with the Dow Jones and S&P indices hitting record highs.

Israeli troops crossed the border in southern Lebanon and continued shelling areas nearby along with airstrikes on the capital, Beirut. The invasion is an escalation after the assassination of Hezbollah leader Hassan Nasrallah on Friday.

In equity news, shares in Covestro jumped as Abu Dhabi state oil giant ADNOC said it had agreed to buy the German chemicals producer for €14.7bn.

Greggs fell despite the UK bakery chain holding guidance. However, news that top-line growth was slowing against tougher comparable periods last year did not impress investors.

Reporting by Frank Prenesti for Sharecast.com