STOXX 600 falls 0.6% as Brent tops $110

Europe's STOXX 600, a broad pan-European share index, fell 0.6% on Tuesday, Oct. 20, a syndicated market report said, after losing close to 1% on Monday.

The decline marked a second straight session of weakness, with ASML and ASMI each down more than 3%, compared with the benchmark's 0.6% fall, as Brent crude traded above $110 a barrel.

French assets stayed in focus after protests highlighted the government's difficulty in reducing a large deficit. "The weekend's protests have further intensified concerns about French public finances given the size of the austerity measures needed to significantly reduce the budget deficit," Pia Fromlet, an economist at SEB, said.

French government bond yields edged lower after their biggest one-day rise in about a month, while the euro rose 0.2% to $1.122 after losses the previous day. French stocks fell in line with the wider market.

France's cities were calm overnight under curfews imposed after disorder the previous weekend, while protest groups announced another round of demonstrations for Saturday, Oct. 24.

Brent touched a five-month high above $110 a barrel after Yemen's Iran-aligned Houthis said on Monday they launched several attacks on Saudi energy, airport and military targets.

The rise in oil prices added to a cautious market tone before major corporate results. Investors were looking for evidence that consumers and the wider economy remain resilient, and that spending on artificial intelligence infrastructure can produce adequate returns.

"Investors are fine with AI being used more. What they're questioning is whether every dollar of AI capex earns more than it costs to finance," Ninghui Liu, head of investment strategy and research for APAC at State Street Investment Management, said. Capex, or capital expenditure, refers to money companies spend on long-term assets such as data centres, chips and equipment.

The concern was visible in South Korea, where AI infrastructure company Elice Group fell nearly 30% on Tuesday and traded below its initial public offering price on its market debut. Nasdaq futures slipped 0.3%, one day after technology shares recovered some ground following the previous week's sharp selloff.

Other markets moved more modestly. Gold fell 0.4% to $4,122 an ounce, bitcoin dropped 0.7% to $81,339.5 and ether eased 0.6% to $2,383.4. The dollar index fell 0.2% to 101.77.

The Japanese yen strengthened 0.2% after an auction of long-dated Japanese government bonds drew record demand. Media reports said the Bank of Japan may raise its inflation outlook for the next fiscal year in forecasts due this month.

The Canadian dollar also gained after Alberta residents voted to remain part of Canada in the province's first referendum on separation; the U.S. dollar fell 0.35% to C$1.406.

SpaceX and Netflix quarterly earnings were due on Tuesday, Oct. 20. Investors were looking for signs that consumer demand and AI-related investment remain strong enough to support elevated spending.

European Central Bank officials Martin Kocher and Olli Rehn, and Bank of England Monetary Policy Committee member Megan Greene, were scheduled to speak on Tuesday, Oct. 20. Their comments may shape expectations for euro-zone and British interest rates.

French protest groups announced another round of demonstrations for Saturday, Oct. 24, after curfews followed the previous weekend's disorder.