Indo-Pak tensions spread from Asia to European markets

European stock markets opened lower on Wednesday after fresh hostilities erupted between India and Pakistan, causing Asian assets to fall and pushing investors into safe havens such as the yen, reports Reuters.

After about an hour of trading, the pan-European STOXX 600 was down about 0.5 per cent. All the main regional indexes were in the red. US stock futures for the S&P 500 were down 0.1 percent.

Earlier, Pakistan said it had carried out air strikes in Indian-controlled Kashmir and shot down two Indian jets in its own airspace.

Indian and Pakistan bonds and currencies fell and MSCI's broadest index of Asia-Pacific shares outside Japan was last down 0.15 percent as the threat of conflict between the nuclear-armed neighbours grew.

"This adds another layer of risks for investors", said Charles St-Arnaud, a strategist at Lombard Odier, although he noted the market moves remained limited for now.

Markets were watching the US-North Korean summit, which begins in Hanoi later on Wednesday. US President Donald Trump will meet North Korean leader Kim Jong Un for their second summit, with the United States pushing North Korea to dismantle its nuclear weapons programme.

The heightened geopolitical risks helped assets considered safer than stocks, such as the Japanese yen, which gained against the dollar.