The classified reports have been distributed to U.S. intelligence agencies for several consecutive months and say Zarqawi, al Qaeda's leader in Iraq, has stored the nuclear device or dirty bomb in Afghanistan, said officials familiar with the intelligence.It is still unclear if the source of this information is reliable, especially given the belief that if al Qaeda had a nuclear device they would not hesitate to use it. It seems that if they have actually obtained a nuke or dirty bomb, the most likely place they would use it is in Europe, primarily because of the relative ease of bringing it there as opposed to into the US.
The question then is if a nuke or dirty bomb were detonated in a European city, what would their reaction be? Undoubtedly, a sizeable segment of the European population will blame the US and/or Israel. But would such an attack have any effect on government policies? Would there be some kind of crackdown on Muslims or on immigration? My guess is that while there would probably be some internal changes, European foreign policy towards the Arab world or to the GWOT would remain pretty much the same as it is now - Arabist and anti-American. As to actually retaliating for such an attack, its hard to execute any type of military action when you don't have a military.
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