The featured CAC40 index lost 103.08 points to 6,266.86 points around 9:25 a.m.

On Monday, it had risen sharply by 1.75%, after two highly turbulent weeks.

"All eyes will be focused on the diplomatic negotiations between Russia and Ukraine of the day," said Christian Parisot, for broker Aurel BGC.

European markets hope in each round of talks that a ceasefire between Russia and Ukraine is negotiated.

But the Russian army is still stepping up its offensive in Ukraine.

In particular, shots hit a residential building in kyiv on Tuesday morning, killing at least two people.

The resurgence of Covid-19 cases in China is also weighing on the morale of investors who fear further disruptions to production chains.

China on Tuesday reported 5,280 cases of Covid-19 in the past 24 hours, the highest tally since the very first epidemic wave in early 2020.

The authorities have decreed confinements in many cities, even entire regions, including the metropolis of Shenzhen, the technological center of China, leading to the closure of many factories, in particular those of the Taiwanese giant Foxconn, the main supplier of Apple.

These economic disturbances caused the Hong Kong Stock Exchange to fall by more than 6% and that of Shanghai by nearly 5%.

For its part, the price of a barrel of reference in the United States, the WTI, fell by more than 5%, falling below the 100 dollar mark, a week after having reached its highest level since 2008 after the invasion of the Ukraine by Russia.

With China being the largest importer of crude oil in the world, the quarantines represent a shortfall for the demand for black gold.

The markets are also impatiently awaiting the conclusions of the monetary policy meeting of the American central bank (Federal Reserve, Fed), which begins on Tuesday.

"Officials will most likely raise interest rates by 25 basis points for the first time since 2018, marking the end of the US central bank's extraordinary stimulus during the coronavirus crisis," he said. John Plassard, investment specialist at Mirabaud.

The question for investors is what will be the next steps of the Fed, in the face of inflation which is at its highest for 40 years in the United States.

In France, inflation accelerated sharply in February, to 3.6% over one year, reaching its highest level since 2008 due to energy prices.

The luxury touched

As China is one of the main markets for luxury companies, the authorities' containment measures raise fears of a drop in revenues for the sector.

Kering lost 2.39% to 551.10 euros, LVMH 2.44% to 54.40 euros, Hermès 2.61% to 1,120.50 euros and L'Oréal 2.07% to 338.35 euros.

The European Union also announced on Friday that it would ban the export of luxury goods to Russia.

© 2022 AFP