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 Travel sector stocks including airlines and hotels fell the most,
pulling the broader indices down from multi-week highs as reports on
the scale of the carnage in the de facto capital of the European
Union unfolded.
Belgian media reported that at least 11 people had been killed and
that one of the blasts at the airport was a suicide bomber. This
came four days after the arrest in Brussels of a suspected
participant in November militant attacks in Paris that killed 130
people.
"The initial reaction in financial markets has been airline stocks
all lower, and safe-haven capital flow with gold, German government
bonds and the Japanese yen in demand," said Brenda Kelly, head
analyst at London Capital Group.
"The news has certainly overshadowed much of the euro zone economic
data this morning," she said.
At 0915 GMT the FTSEuroFirst 300 index of leading shares was down 1
percent at 1,326 points. Germany's DAX was also down 1 percent and
Belgian stocks were down 0.8 percent. These indices had earlier been
down twice as much.
The STOXX Europe 600 Travel & Leisure index was the top sectoral
faller, down 2.2 percent. Shares in major European airlines like
easyJet and Air France-KLM were down as much as 4 percent, and
hotel company Accor also fell 4 percent.
Gold rose 1 percent to $1,255 an ounce, and the yield on benchmark
German government bonds fell to a two-week low of 0.18 percent. U.S.
Treasury yields fell 2 basis points across the curve.
In currency markets the Japanese yen, often considered a something
of a safe-haven asset, rose across the board, notably against the
euro. The euro was last down 0.6 percent at 125.10 yen <EURJPY=> and
the dollar was down 0.3 percent at 111.60 yen.
The single currency fell a third of a percent against the dollar to
$1.1205.
BLASTS OVERSHADOW DATA
For financial markets, the events in Brussels came in a week where
liquidity was starting to dry up ahead of the Easter holiday and
investors were beginning to think about cashing in on a steep rally
in stocks over the last few weeks.
"Coming up to the Easter holiday, people are going to be very
reluctant to put more money into these (stock) markets. If anything,
they will be more likely to take money out," said Michael Hewson,
chief market strategist at CMC Markets in London.
"Anything like the events we're seeing in Brussels this morning is
going to weigh on risk sentiment and risk appetite," he said.
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U.S. stock futures pointed to a fall of around a third of one
percent on Wall Street.
Investors paid little attention to the economic data released on
Tuesday which showed a slight pick up in German business morale and
euro zone business activity in March
Earlier, Asian stocks seesawed as hawkish comments from U.S. Federal
Reserve officials clouded the monetary policy outlook less than a
week after Fed Chair Janet Yellen had set out a more cautious path
to interest rate increases this year.
The dollar got a mild boost from the suggestion that interest rate
hikes could be on the way sooner rather than later.
Japan's Nikkei stock index added 1.9 percent, closing at a one-week
high, after markets in Tokyo reopened after a public holiday on
Monday. A weaker yen, before the Brussels-related rebound, gave a
tailwind to local shares.
Elsewhere, sterling was one of the biggest losers among the major
currencies after ratings agency Moody's said Britain's credit rating
will be put under pressure by a marked slowdown in fiscal
consolidation unveiled in last week's budget.
The warning came amid concerns about Prime Minister David Cameron's
ability to keep Britain in the European Union after leading 'Out'
campaigner Iain Duncan Smith resigned from the cabinet late on
Friday.
Sterling was last down 0.6 percent at $1.4281, more than two cents
off Friday's one-month high of $1.4514.
It was a rare day of stability in oil markets, with U.S. crude
futures unchanged at $41.53 a barrel and Brent crude also flat on
the day at $41.60.
(Reporting by Jamie McGeever; Editing by Tom Heneghan)
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