Europe open: Stocks show resilience in aftermath of Paris terror attacks

European equity markets were a little lower as travel and leisure stocks slumped following Friday’s terrorist attacks in Paris, but losses were nowhere near as bad as had been expected.

At 0900 GMT, the benchmark Stoxx Europe 600 index was down 0.1%, France’s CAC 40 was down 0.3% and Germany’s DAX was 0.2% lower. Early expectations had been for the main European indices to fall between 2% and 3% at the open.

“Most continental European equity markets are lower as investor reaction sees the flight to safety that is an inevitable reflex response from any terrorist attack,” said Rebecca O’Keeffe, head of investment at Interactive Investor.

“However in a major sign of defiance, equity markets have fallen far less than expected and, outside of tourism and transport stocks, remain resilient. The reasons for this may lie in the collective response by global leaders, with affirmative action against Islamic State potentially providing a new source of support for markets.”

She added: “The major question for investors is whether the increasing threat posed by Islamic State could see confidence remain subdued for longer? With investor sentiment already negative and equity and commodity prices under severe pressure, the threat of a sustained fall in consumer and business confidence across Europe clearly indicates that the strength of the European recovery remains a key risk for global markets.”

French warplanes launched an assault on Islamic State targets in Syria on Sunday after a series of coordinated terrorist attacks on the country’s capital Friday night.

The French Defence Ministry said 10 aircraft dropped 20 bombs on facilities used by IS, hitting a command centre, a militant-training facility and an arms depot.

The Islamist militant group has claimed responsibility for the attacks, saying they were payback for France’s air strikes on IS targets in Syria.

The Stoxx 600 travel & leisure index was down 2.4%, while airline stocks slumped, with Air France KLM down 5%, British Airways parent International Consolidated Airlines Group down 2% and Deutsche Lufthansa down 1.8%.

Eurotunnel, which controls the Channel Tunnel, was 4% weaker, while French hotel group Accor slid nearly 7%.

On the upside, oil and gas stocks did well as oil prices nudged higher amid the air strikes in Syria, with the Stoxx 600 index for the sector up 1.3%.

Elsewhere, Hennes & Mauritz fell after the fashion retailer’s October sales came in short of expectations, while Sonova Holding AG tumbled after the hearing aid maker downgraded its sales and profit forecasts for the year.

In London, Taylor Wimpey was on the front foot after a well-received trading update.

Still to come on the macroeconomic front, Eurozone final inflation figures for October are at 1000 GMT, while in the US, Empire manufacturing is at 1330 GMT.