Market Jitters: Geopolitical Tensions Hit European Stocks

Europe's main stock index hit a three-month low due to geopolitical tensions linked to Russia's updated nuclear doctrine. Regional markets, especially Poland's WIG20, saw significant declines while safe-haven assets rose. Investors are eyeing U.S. economic policies under President-elect Trump and monitoring potential impacts on inflation and interest rates.

The European stock markets witnessed a downturn as the main index plunged to its lowest in three months on Tuesday. Growing geopolitical tensions, particularly Russia's revised nuclear doctrine, led investors to abandon riskier assets in favor of safer options, causing the pan-European STOXX 600 to fall 0.4% by the session's close.

In Poland, a neighbor to Ukraine, the leading WIG20 index was hit the hardest, dropping over 3%. This comes amidst rising prices for safe assets like gold and the U.S. dollar. As investor anxiety grows, the Euro STOXX volatility index reached near-peak levels seen this month.

Analysts highlight the potential shockwaves from President-elect Trump's economic strategies, questioning the effects on global interest rates and inflation. Market observers are particularly focused on anticipated appointments and Nvidia's upcoming earnings. Key market movements included defence group Rheinmetall's stock rise, contrasting with substantial declines for companies like Diploma Plc and Caixabank.

(With inputs from agencies.)