* STOXX 600 down 1 pct
* VSTOXX hits highest since Dec 2016
* Miners, oil stocks biggest fallers
* Britain's PM calls for early election
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By Kit Rees and Helen Reid
LONDON, April 18 European shares hit three-week
lows on Tuesday in volatile trade after Britain's prime minister
called for an early election and the first round of France's
presidential election loomed.
The pan-European STOXX 600 index closed down 1
percent, suffering its worst day's losses in 10 weeks, while
Britain's FTSE 100 fell 2.5 percent.
The British blue-chip index suffered its worst day's fall
since the Brexit aftermath after Theresa May called for a vote
on June 8, saying it was the only way to guarantee political
stability as Britain negotiates its way out of the European
Sterling rose after the announcement, weighing on
foreign-earning UK equities.
"The rise in the pound appears to be driven by expectations
that with an enhanced majority May will no longer be held
hostage by hard-Brexiteers in her Party, and as such will have a
better chance of avoiding a hard Brexit to WTO trade rules which
some fear would hit the economy," said Toby Nangle, head of
multi-asset allocation at Columbia Threadneedle.
Retailers and housebuilders, which stand to gain from a
stronger sterling, were the only risers on the blue-chip index.
Marks & Spencer, Barratt Development, and
Persimmon gained 0.9 to 1.9 percent.
Traders said that any weakness in the currency could benefit
UK equities going forward.
"We are still bullish on UK equity markets," John Moore,
trader at Berkeley Capital, said.
"If there is further uncertainty in the UK, we believe the
pound against the dollar will have a bit of a sell-off, and the
FTSE 100 will benefit from that."
Europe's VSTOXX volatility index hit its highest
level since December 2016, with only three trading days to go
until the first round of the French presidential elections.
France's CAC 40 closed down 1.6 percent, posting its
worst loss in nearly seven months.
"The (French) polls are neck-and-neck at the moment, so it
seems a good chance that a political outsider is going to win,"
Jasper Lawler, senior market analyst at London Capital Group,
A poll released by Ifop-Fiducial saw centrist Emmanuel
Macron leading the first round of the French election with 23
percent, followed closely by far-right Marine Le Pen with 22
percent and far-left Jean-Luc Melenchon with 19.5 percent.
The basic resources sector was the biggest sectoral
faller, down 3.1 percent, with analysts saying a slump in iron
ore prices was weighing on miners.
Shares in steel miner ArcelorMittal, Anglo
American and BHP Billiton fell 5.1 to 6.2
Oil & gas shares also fell 2 percent as the price of
oil edged down following an expected climb in U.S. output.
Oil firms Tullow Oil and BP declined 4.6
percent and 2.9 percent respectively.
Jeweler Pandora was the worst performing stock
on the STOXX 600, down over 12 percent at its lowest level since
August 2015 after Nordic broker Carnegie downgraded the stock to
"hold" from "buy".
Spanish infrastructure firm Abertis was up 6.6
percent, the top gainer. Italy's Atlantia was considering a
friendly takeover of the firm, a source said after the
Banco Popular was also a top riser, up 6.2 percent,
supporting Spain's IBEX which outperformed peers, down
Volkswagen was a silver lining on Germany's DAX
, up 4.4 percent after its first-quarter results
exceeded expectations, helped by a recovery in its core brand
VW, which had been battered by the company's emissions cheating
(Reporting by Kit Rees; Editing by Vikram Subhedar and Andrew