By Ankika Biswas and Joao Manuel Vicente Mauricio

(Reuters) – Europe's main stock index fell to a three-month low on Tuesday, as heightened geopolitical tensions following Russia's warning on its updated nuclear doctrine prompted investors to shift from risky assets to safe havens.

The pan-European STOXX 600 dropped 0.9%, shedding early gains, and was on track for a third straight day of loss, with safe-haven assets such as gold and the U.S. dollar back on the rise.

The Kremlin stated that the aim of the updated nuclear doctrine was to make potential enemies understand the inevitability of Russian retaliation for an attack.

"I don't think this will have any impact on the (European) economy or earnings. It's just a natural reaction based on anytime the word nuclear is mentioned from any head of state," said Patrick Armstrong, chief investment officer at Plurimi Wealth.

"It obviously sets investors' minds about potential downside as well as an equity investment is driven by the hope for an upside. So I don't think it's anything other than rhetoric, and the market will just get past it."

The Euro STOXX volatility index surged to 20.34, hovering near the highest levels seen this month, signalling growing investor anxiety.

Automobiles and banks slumped around 2% each, the worst-hit sectors in an overall market decline.

The upcoming appointments for U.S. Treasury secretary and trade representative under President-elect Donald Trump are also in focus after last week's picks for health and defence roles.

Investors are starting to question the effect of Trump's inflationary policies, like possible tax cuts, while also awaiting AI chip leader Nvidia (NASDAQ:NVDA)'s earnings on Wednesday, said Richard Hunter, head of markets, Interactive Investor.

With ECB policymakers expressing concern over potential U.S. trade tariffs hurting euro zone growth, any signals on the global interest rate-cut trajectory will be closely watched.

Trump's policies are also seen as reigniting inflationary fears and could complicate prospects for further U.S. rate cuts.

Among single stocks, Thyssenkrupp (ETR:TKAG) jumped 8% after releasing its fourth-quarter results, with a trader pointing to free cash flow as a positive surprise.

Embracer rose 2% as tabletop games publisher Asmodee is set to be spun off from the Swedish gaming group.

Swiss hearing aid maker Sonova Holding fell 2% following half-year core earnings miss.

Nestlé (NS:NEST) reversed early gains to drop 1.3%. The food giant is set to boost advertising and marketing, trim costs by $2.8 billion by 2027, and carve out its water and premium drinks businesses into a standalone global unit.

Shares of Aeroports de Paris rose 3% after Stifel upgraded the French airport operator's stock to "buy" from "hold."