Tech leads European shares higher, France’s political outlook in focus

(Reuters) – European shares opened higher on Tuesday, led by the tech and basic resources sectors, with investors on tenterhooks ahead of the outcome of France’s political instability this week as the likelihood of the government’s collapse has rocked the country’s markets.

The pan-European STOXX 600 rose 0.2%, with the technology and basic resources sectors leading the charge, gaining 0.9% and 0.8%, respectively.

Although up 0.6% on the day, France’s CAC 40 blue-chip index continues to underperform its regional peers as the country’s government faces an all but certain collapse on Wednesday after far-right and left-wing parties submitted no-confidence motions against Prime Minister Michel Barnier.

Both French stock and bond markets have come under pressure. The euro zone’s second-biggest economy is grappling with rising deficit, with Barnier’s government facing strong opposition to their budget.

Shares of Worldline were among the biggest gainers on STOXX 600, extending its gains from the previous day after the French payments group attracted early-stage takeover interest from private equity firms.

Mercedes-Benz dropped 2% after Barclays cut its rating on the German carmaker’s shares to “underweight” from “equal-weight”.

(Reporting by Joao Manuel Mauricio in Gdansk; Editing by Savio D’Souza)