(Bloomberg) -- French stocks declined following two days of gains, as investors assessed the lingering impacts on markets from political risks.

The CAC 40 Index was down 0.8% at the close, while the Stoxx Europe 600 Index edged 0.2% lower.

European basic resources, insurance and travel shares led gains in the regional benchmark, while real estate and technology were the biggest laggards. 

The UK’s mid-cap FTSE 250 Index lowered slightly even as data showed inflation fell to the Bank of England’s target for the first time in almost three years, supporting the case for interest-rate reductions later this year.

A rally in the Stoxx 600 has stalled this month as a snap election in France sent investors fleeing from risk assets. The CAC 40 Index is up just about 1% this year in Paris, a sharp reversal from scaling record highs as recently as May. The latest survey by Bank of America Corp. showed the country is now the least favored equity market in Europe among fund managers.

Still, market strategists said equity volatility was likely to settle in the run-up to the French elections. While polls indicate Marine Le Pen’s party is best placed to become the largest group in the National Assembly following two rounds of voting starting June 30, projections don’t show it winning more than half of the 577 seats. 

“The tail risk that Le Pen could trigger a near-term financial crisis by implementing her past fiscal agenda has receded,” said Ulrich Urbahn, head of multi-asset strategy and research at Berenberg. Choppiness in European markets “will at least converge somewhat” with US volatility, he said. “There is already a lot of risks priced into European equities.”

Among individual movers, homebuilder Berkeley Group Holdings Plc slid as it said it was establishing its own rental housing platform. SMA Solar Technology AG plunged after reducing its earnings guidance and as Oddo BHF cut its recommendation on the stock to neutral. 

Vodafone Group Plc gained as its subsidiaries raised about $1.8 billion in proceeds by selling shares in India’s Indus Towers Ltd. in block deals executed on exchanges.

For more on equity markets:

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--With assistance from Jan-Patrick Barnert and Michael Msika.

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