LONDON: European shares fell in early deals on Wednesday, snapping a three-day winning streak amid growing Indian-Pakistani tensions, and a warning from Beiersdorf hammered consumer staples stocks while Air France-KLM and Marks and Spencer sank.
The pan-European STOXX 600 index was down 0.6 percent at 1007 GMT after hitting its highest level since the beginning of October a day earlier. All continental bourses were in the red.
The export-heavy FTSE 100 lagged the broader market as sterling lingered near five-month highs against the dollar amid fresh hopes that a no-deal Brexit could be avoided.
Investors were still awaiting fresh news on China-U.S. trade talks, but sentiment overall was gloomy with a growing confrontation between India and Pakistan rattling confidence in assets considered risky.
Healthcare and miners were the only sectors in positive territory in early deals, with travel, leisure, chemicals and retail notching up the biggest losses.
"Geopolitical tensions between Pakistan and India have strongly impacted equities from Tokyo to London today, with investors fearing a further escalation," said Pierre Veyret, analyst at ActivTrades.
Among individual moves, shares in Air France KLM were on track for their worst day in more than a decade after the Dutch government said it would take a 14 percent stake in the airline. The move highlighted tensions between the Netherlands and its French partners in the company.
Investors also punished Beiersdorf, which plunged to two-year lows after the Nivea skin cream maker issued a shock warning about its 2019 operating margins, with the company's new CEO declaring the consumer goods industry was in "turmoil".
Unilever, Henkel and Reckitt Benckiser were all dragged lower with Beiersdorf.
Alongside the results outlook, the company said it would invest to compete with niche brands disrupting the sector.
"Beiersdorf have joined Henkel, Colgate and Coke in 'the reset club' in a dramatic first act by new CEO Stefan de Loecker and CFO Desi Temperley," said Jefferies analyst Martin Deboo.
He said the move would up the ante for Unilever, which competes with all three of the resetters in big categories like skincare, haircare, dentifrice and laundry.
"We therefore expect the credibility of Unilever's 2020 margin target to be subject of even greater debate," he said.
British retailer Marks & Spencer plunged 9 percent after announcing it would finance its $1 billion food delivery tie-up with Ocado by issuing shares and cutting its dividend. In contrast, Ocado bounced to the top of the FTSE 100 as the companies outlined details of the deal.
Bayer was a bright spot, rising 3.4 percent after delivering better-than-expected results, boosted by its recent Monsanto acquisition.
Danish hearing aid maker GN Store topped the STOXX 600 leader board as investors welcomed its results.