LONDON (BLOOMBERG) - Bearish sentiment engulfed Europe's stocks for a second day after Turkey's military shot down a Russian jet.
The Stoxx Europe 600 Index dropped 1.6 per cent at 12:27 p.m. in London (8.27 pm Singapore time), with more than 550 shares down. Turkey said it shot down the jet near the Syrian border after the pilots ignored repeated warnings that it was violating Turkish airspace.
The incident marks the first direct clash between the foreign powers embroiled in the civil war.
"You can see sentiment heading towards a risk-off type attitude," said Jasper Lawler, a London-based market analyst at CMC Markets Plc. "There's a little bit of concern on the sidelines about geopolitics generally, and I think the Russian jet being shot down over Syria may be keeping people on edge a bit."
Thomas Cook Group Plc and hotel chain Accor SA slid more than 4 per cent. IAG SA, the parent of British Airways, and Ryanair Holdings Plc fell at least 3 per cent.
Bearish sentiment is taking over after the benchmark gauge for European equities had its biggest slide in more than a week yesterday amid declines in metals that dragged commodity producers lower. As of Monday, the Stoxx 600 was more than 8 percent below its record in April, paring its annual advance to 11 percent.
Altice NV tumbled 8.4 percent as Goldman Sachs Group Inc. sold shares to fund an options transaction with billionaire Patrick Drahi. Zodiac Aerospace sank 7.7 per cent after its 2016 operating profit margin forecast was lower than analyst estimates implied.
LVMH Moet Hennessy Louis Vuitton SE lost 4.8 percent and Cie. Financiere Richemont SA dropped 3.8 per cent after Nomura Holdings Inc. said consensus estimates for the luxury-goods industry in 2016 may be too high.
Volkswagen AG was one of the few European shares that climbed. It advanced 5 percent after winning approval to repair most of its rigged European diesel engines. Glencore Plc added 3.4 per cent as commodities rebounded.
The Stoxx 600 advanced 13 per cent from its low in September through the end of last week on speculation the European Central Bank will add to its stimulus program and on optimism that higher U.S. interest rates won't hamper growth.
Traders are placing a 74 per cent chance that the Federal Reserve will act next month.