MILAN: News of North Korea's latest nuclear test hit European shares on Monday but failed to trigger a massive sell-off as investors seem to get used geopolitical tensions.
The pan-European STOXX 600 index and euro zone blue chips both fell 0.5 percent and all major bourses, from the UK's FTSE to France's CAC 40, posted declines from 0.3 to 0.8 percent.
"Equity markets in Europe are in the red today as tensions surrounding North Korea were heightened again on the back of the nuclear bomb test carried out by the regime over the weekend", said David Madden from CMC Markets.
"Traders are clearly nervous, as stocks are lower, but the sell-off today hasn’t been as bad a previous ones", the market analyst argued.
North Korea said it tested an advanced hydrogen bomb for a long-range missile on Sunday, prompting a warning of a "massive" military response from the United States if it or its allies were threatened.
"An H-bomb is undeniably different from the previous missile launches or nuclear tests ... However, the biggest question to investors remains - what’s next? Will the tensions lead to negotiations, or war?" said Hussein Sayed, chief market strategist at FXTM.
Uncertainty over the response to the latest North Korean test worried investors, leading to a spike in stock market volatility. Europe's volatility index <.V2TX> was up 1.5 points.
While no sector in Europe ended in positive territory, stocks in the financial services <.SX7P> industry had the worst day, losing 1 percent.
Gains in safe-haven assets, including gold, sent precious metal miners Randgold
Fiat Chrysler
Pharma heavyweight Novartis
"Making a head of R&D CEO of an organisation raises some questions for us", UBS said in a research note, arguing that commercial and clinical success were two very different things.
Novartis
Gemalto
UK speciality chemicals firm Victrex
Meanwhile Britain's top share index slipped on Monday to snap a three-day winning streak as rising geopolitical tensions took their toll, hitting risky assets such as banks, but fears that it would trigger a broader sell-off proved to be unfounded.