Il Nuovo Postiglione - Stock markets diverge tracking US outlook

Investor focus was also on company earnings, as gold and oil prices continued to win support from Middle East tensions.

"A mix of continuing unrest in the Middle East and uncertainty over the US election casts a cautious shadow over markets," noted Derren Nathan, head of equity research at Hargreaves Lansdown.

Wall Street retreated from record highs Monday, while the dollar was mixed against main rivals on Tuesday.

Tech titans Alphabet and IBM announce their latest results over the next two days, while earnings from Boeing, Coca-Cola, and L'Oreal are also in the pipeline.

General Motors raised some of its full-year profit projections Tuesday following solid earnings as strong vehicle pricing compensated for lower auto sales.

All major European equity markets were in the red mid-session Tuesday, after gains for Shanghai and Hong Kong in the hope of more Chinese stimulus.

London stocks fell following data that showed UK public borrowing rose more than expected in September, as the new Labour government prepares for its first budget next week that is expected to include tax rises.

Frankfurt edged lower but was bolstered by strong third-quarter earnings for German software giant SAP, whose shares were up nearly four percent in early afternoon deals.

Expectations of another bumper US interest-rate cut from the Federal Reserve have been tempered slightly following a recent run of strong American data on jobs creation and as some top decision-makers suggested they would like to see a slower pace of rate cuts.

Concerns over the outcome of the US election on November 5 have weighed on investor sentiment, with general consensus across polls and forecasts being that Donald Trump has "gained ground" on Kamala Harris, Deutsche Bank economists noted.

Tokyo closed down more than one percent Tuesday, even as the yen softened against the dollar to sit at its weakest level since early August.

Gold hit a fresh record high at $2,740.59 an ounce, as traders sought out the haven investment as Israel considers its response to Iran's missile barrage this month.

Uncertainty over the US presidential election has also helped fuel the precious metal's rally, according to analysts who added that concerns about a possible wider conflict in the Middle East were lifting oil prices.

- Key figures around 1045 GMT -

London - FTSE 100: DOWN 0.7 percent at 8,318.24 points

Paris - CAC 40: DOWN 0.8 percent at 7,480.06

Frankfurt - DAX: DOWN 0.4 percent at 19,389.96

Tokyo - Nikkei 225: DOWN 1.4 percent at 38,411.96 (close)

Hong Kong - Hang Seng Index: UP 0.1 percent at 20,498.95 (close)

Shanghai - Composite: UP 0.5 percent at 3,285.87 (close)

New York - Dow: DOWN 0.8 percent at 42,931.60 (close)

Euro/dollar: UP at $1.0826 from $1.0818 on Monday

Pound/dollar: DOWN at $1.2977 from $1.2982

Dollar/yen: UP at 150.86 yen from 150.82 yen

Euro/pound: UP at 83.41 pence from 83.30 pence

Brent North Sea Crude: UP 0.9 percent at $74.95 per barrel

West Texas Intermediate: UP 1.0 percent at $70.72 per barrel

M.Dodaro--INP