European stocks pull back after biggest rally in 2 months – MarketWatch

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European stocks edged lower on Tuesday, with the benchmark index pulling back after its biggest rally in two months as a North Korean missile launch rattled investors.

The Stoxx Europe 600 index SXXP, -0.16%  fell 0.2% to 382.70, setting it on track for its first loss this week. The index on Monday rallied 1.1% for its biggest one-day percentage gain since April 24, buoyed by rises for banks and oil giants.

Trading volumes on Tuesday could be lower than usual as Americans traders are out for the Independence Day holiday.

Read: July 4th: Which markets are closed?

North Korea tensions: The pullback on Tuesday came as investors assessed the latest developments in North Korea. State media claimed the country has successfully test-launched an intercontinental ballistic missile, an advance in its attempt to threaten the U.S. with a nuclear weapon.

Traditional safe haven trades, such as gold and the yen, benefited from the geopolitical uncertainty. Gold GCQ7, +0.39%  added 0.4% to $1,224.60 an ounce, while the dollar USDJPY, -0.14% bought ¥113.07, compared with ¥113.38 late Monday in New York.

“The market reaction to geopolitical tensions may be elevated slightly with the U.S. on public holiday for Independence Day today, however, once the moves begin to settle, the market is likely to view the rebounds on the safe haven plays such as gold and the yen as another chance to sell,” said Richard Perry, market analyst at Hantec Markets, in a note.

Stock movers: Shares of J Sainsbury PLC SBRY, +1.04% pared earlier gains, but were still up 0.3% after the supermarket chain said first-quarter same-store sales rose 2.3% and that its cost savings plan is on track.

SKF AB SKFB, -0.93%  lost 0.8% after the ball bearings manufacturer said it is being sued by German car maker Daimler AG DAI, +0.43%  as a consequence of a 2014 European Union settlement decision over violation of competition rules.

Ryanair Holdings PLC RY4C, +0.86%  put on 1.2%. The discount airline said passenger traffic had increased to 11.8 million customers in June, a gain of 12% year-on-year.

Individual indexes: The FTSE 100 index UKX, -0.26%  shed 0.3% to 7,353.77, under pressure from falls for the U.K. benchmark’s oil companies and banks.

Germany’s DAX 30 index DAX, -0.10%  slipped 0.1% to 12,458.25, while France’s CAC 40 index PX1, -0.12%  lost 0.2% to 5,187.88.

The euro EURUSD, -0.0968%  was flat around $1.1362, before the release of an update on eurozone producer prices in May.

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