PARIS (Reuters) – The main European stock markets rebounded on Tuesday morning the day after a drop linked to political uncertainties arising from the result of the European elections and the dissolution of the National Assembly in France.

The weakness of the gains, however, shows that caution remains in order as the American Federal Reserve (Fed) begins a two-day monetary policy meeting and on Wednesday the monthly consumer price index in the United States will be published.

In Paris, the CAC 40 rose 0.42% to 7,926.95 points around 07:50 GMT. In London, the FTSE 100 advanced 0.24% as today’s data showed a slowdown in the labor market one week before the Bank of England (BoE) monetary policy meeting. In Frankfurt, the Dax rose 0.12%.

The EuroStoxx 50 index increased by 0.31%, the FTSEurofirst 300 by 0.08% and the Stoxx 600 by 0.10%.

Futures contracts on Wall Street predict a drop of 0.08% for the Dow Jones, 0.06% for the Standard & Poor’s 500 and 0.10% for the Nasdaq after the closing records recorded by the latter two indices .

The results of the European elections were marked by a breakthrough by far-right parties and by a political crisis in France with the dissolution of the National Assembly and the holding of early legislative elections. The financial rating agency Moody’s warned on Tuesday that the organization of these elections, scheduled for June 30 and July 7, was negative for France’s credit rating.

On the bond market, the ten-year OAT yield stretches slightly, by two basis points, to 3.2581%, while the spread (yield gap) between the bonds of Germany and France for this deadline, which increased on Monday by 8.5 basis points, to 56 points, is now at 58.83 points.

On the stock market in Europe, the positive trend is driven by defensive compartments such as health (+0.48%).

The European banking sector (-0.16%), perceived by some experts as one of the most exposed to political risk, continues to suffer, notably with Société Générale (-0.26%). Sources also reported that the bank would have difficulty finding buyers for its securities custody subsidiary SGSS.

Atos fell 12.06% after announcing that it would favor the offer from David Layani, its largest shareholder, to the detriment of that submitted by EP Equity Investment (EPEI) of Czech businessman Daniel Kretinsky.

JCDecaux lost 1.82% after Deutsche Bank lowered its recommendation to “hold” versus “buy” on the stock.

London-listed Rio Tinto shares fell 2.03% after the mining giant announced on Tuesday the purchase of Mitsubishi Corp’s 11.65% stake in Boyne Smelters (BSL) for an undisclosed amount.

(Written by Claude Chendjou, edited by Blandine Hénault)

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