European shares on Friday fell for a second straight day on reports that US President Donald Trump is planning more tariffs on China, with Europe’s STOXX posting its worst monthly performance since February.
The pan-European STOXX 600 on Friday ended the session down 3.1 points, or 0.8 percent, at 382.26, a decline of 0.3 percent from a close of 383.56 on Aug. 24.
Germany’s DAX, heavier in trade-sensitive industrial stocks, on Friday fell 130.18 points, or 1 percent, to 12,364.06, falling 0.2 percent from 12,394.52 a week earlier.
All sectors, except one, were in negative territory.
Sparring over trade between Trump and the EU weighed on automakers’ stocks, the worst-performing sector, which fell 1.6 percent.
Trump reportedly rejected an EU offer to eliminate tariffs on cars, saying that the bloc’s trade policies are “almost as bad as China.”
European Commission President Jean-Claude Juncker said that the EU would respond in kind if the US imposed tariffs on cars.
“It’s very hard to see a decisive resuscitation of risk appetite until these tensions are resolved,” Janus Henderson Investors multi-asset team head Paul O’Connor said. “We have learned to underreact to some of the individual headlines, because if you try to extrapolate from any of them you could find yourself in big trouble.”
Daimler AG, Volkswagen AG, BMW AG and Continental AG were among the biggest weights on the DAX, each falling 1.4 to 1.9 percent.
In contrast, Whitbread PLC soared as much as 19 percent after the British company agreed to sell its Costa Coffee chain to Coca-Cola Co for ￡3.9 billion (US$5.1 billion).
The deal’s value exceeded the market’s expectations by ￡500 million to ￡900 million and was wrapped up more quickly than expected, traders said.
Most of the cash is to be returned to shareholders.
Sage Group PLC tumbled nearly 8 percent, one of the biggest decliners among European stocks, after the British software developer surprised the market by announcing that CEO Stephen Kelly would step down in May next year.
“This will leave a hole and raise further questions about reaching such targets,” Mirabaud Securities LLP global thematic group cohead Neil Campling said. “This is one we wouldn’t be bottom-fishing right now.”
While trade disputes have caused uncertainty and volatility, investors drew comfort from strong earnings.
“Concerns around trade are not significantly affecting macro and market fundamentals at this stage. There’s still a fairly strong global recovery; earnings forecasts remain resilient across the board,” O’Connor said. “It limits the upside, but isn’t something that is changing our perception of broader market fundamentals.”
However, analysts have adjusted their earnings expectations for auto stocks since the trade war broke out.
Additional reporting by staff writer
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