(Bloomberg) -- European stocks fell on Tuesday, with a guidance cut from plane maker Airbus SE and a failed drug trial from Merck KGaA hurting investor sentiment.

The Stoxx 600 Index fell 0.2% by the close. Airbus shares sank by the most since November 2021 after the company lowered its targets for earnings and aircraft deliveries, citing persistent supply-chain issues. Merck’s stock slid after the surprise failure of a promising medicine raised questions about the growth prospects of the company’s health-care division. 

Among sectors, industrial goods, services and financial services led declines, while health care as well as travel and leisure stocks outperformed.

A recent rally in European stocks has stalled this month as political uncertainty in France is taking the shine off resilient economic growth and an interest-rate cut from the region’s central bank. Investors are expected to zero in on the French elections over the coming two weeks, with businesses including banks, highway operators and utilities in focus.

A poll by Bloomberg News showed market strategists don’t expect additional upside for European stocks this year. They’re adopting a wait-and-see stance ahead of the French elections, which could bring big changes for economic policy. 

Strategists may also be wary of predicting more gains in the second half of the year, which could include a possible change in power in the UK, and a US election campaign that features trade topics.

However, Liberum strategist Joachim Klement said French stocks provide “a good buying opportunity for longer-term investments right now.” Liberum is focusing on “companies that are not exposed to the tech sector or China and prefer companies with domestic European earnings that benefit from lower interest rates,” Klement said.

Some fund managers said they’ve added exposure to stocks that have a high proportion of international sales and those in more defensive sectors.

For more on equity markets:

  • Politics Mean Strategists Are in Wait-and-See Mode: Taking Stock
  • M&A Watch Europe: Covestro, Eurofins, Neoen, Schneider Electric
  • Shein IPO Noise Gets Louder After London’s Dismal Run: ECM Watch
  • US Stock Futures Unchanged
  • Retailers United: The London Rush

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--With assistance from Michael Msika.

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