(Reuters) -European shares dropped on Tuesday, led by losses in France as political uncertainty deepened in the country, while mounting concerns over the U.S. Federal Reserve’s independence curbed appetite for riskier assets globally.
France’s CAC 40 fell 1.4% and its bonds stumbled as the country’s minority government looked increasingly likely to be ousted next month.
Three main opposition parties said they would not back a confidence vote which Prime Minister Francois Bayrou announced for September 8 over his plans for sweeping budget cuts.
Shares of French banks BNP Paribas and Societe Generale slumped 6.2% and 5.2%, respectively.
The wider European STOXX 600 index fell 0.7% by 0704 GMT with all major regional bourses in the red.
U.S. President Donald Trump on Monday took the unprecedented action of firing Federal Reserve Governor Lisa Cook, over claims of mortgage borrowing impropriety, sparking fresh concerns over the U.S. central bank’s independence that sparked a flight from U.S. assets.
Hours later Cook responded in a statement emailed to reporters through the law office of lawyer Abbe Lowell, saying of Trump that “no causes exists under the law, and he has no authority” to remove her from the job.
A dovish tilt from U.S. central bank Chair Jerome Powell had brought the European STOXX 600 within striking distance of an all-time high on Friday.
Among stocks, British American Tobacco fell 1.8% after the maker of Dunhill cigarettes said that its finance chief Soraya Benchikh is stepping down with immediate effect, after about 15 months in the role.
(Reporting by Medha Singh in Bengaluru; Editing by Mrigank Dhaniwala)
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