European stocks fell on Tuesday as geopolitical tensions rose after President Vladimir Putin amended Russia’s nuclear doctrine in response to Ukraine’s use of U.S.-made long-range missiles. The STOXX Europe 600 index fell 0.5% to its lowest point in three months, while Germany’s DAX and France’s CAC 40 index each fell 0.7%. The FTSE 100 fell 0.1%. Safe-haven assets such as gold, government bonds and the Swiss franc rose as investors sought refuge.

The market turmoil followed Ukraine’s first use of US-supplied ATACMS missiles to attack military targets in Russia’s Bryansk region. The airstrikes came days after U.S. President Joe Biden authorized the use of North Korean troops in part to join the war. Putin also signed a decree updating Russia’s nuclear doctrine allowing for a nuclear response to conventional attacks with the support of nuclear-weapon states.

Under the revised doctrine, any attack on Russia or its ally Belarus, even with conventional weapons, could justify a nuclear response if the aggressor had the support of a nuclear power. be. Kremlin spokesman Dmitry Peskov stressed that the changes demonstrate Russia’s readiness to escalate if necessary, describing the move as a “timely adjustment to the current situation.” did.

Defense stocks rose as tensions rose, with Germany’s Rheinmetall and Sweden’s Saab up 3.9% and 3.6%, respectively. Meanwhile, economically sensitive sectors such as banks and retail dragged down the broader index, with bank stocks falling 1.4%.

Bond markets reflected growing anxiety, with German yields falling as prices rose. Gold rose 0.7% to $2,630 per troy ounce, further indicating a flight to safety. The Swiss franc also strengthened, gaining 0.1% against the US dollar.