European stocks tanked on Friday, with automakers hit especially hard, after US President Donald Trump widened the scope of his trade disputes by threatening to impose new tariffs on Mexican imports.
Investors exited riskier equity positions and moved to safer ground, sending European defensive stocks higher and yields on German bonds to record lows.
The pan-Europe STOXX 600 fell 0.8 percent on the day to close out last month with a 5.7 percent slide, its worst monthly loss since January 2016.
It was down 1.8 percent for the week.
“President Donald Trump is playing a Game of Thrones with both foreign and domestic adversaries,” Ed Yardeni, president and chief investment strategist at Yardeni Research, wrote in a note.
“Since he is the president of the world’s greatest economic and military power, he claimed that he will consummate lots of deals with them that will greatly benefit the US in short order,” Yardeni said, adding: “The results have been mostly disappointing so far.”
Germany’s trade-sensitive DAX fell 1.5 percent to an about five-month closing low.
French stocks slid 0.8 percent, matching their London peers.
Trump’s move hit European stocks exposed to Latin America’s second-largest economy.
Madrid-listed lenders Banco Santander SA, Banco de Sabadell SA and Banco Bilbao Vizcaya Argentaria SA, all of whom have a sizable presence in Mexico, slid between 2.4 percent and 4.1 percent.
Automakers and their suppliers shed 2 percent, while Fiat Chrysler Automobiles NV and Volkswagen AG — which import vehicles to the US from Mexican plants — shed 4.8 percent and 2.6 percent respectively.
During last month, tariff-exposed auto stocks have greatly underperformed the STOXX 600, which itself has lagged the S&P 500.
Milan-listed stocks fell 0.7 percent, with local banks matching that decline.
Italian lenders were hit by a Bank of Italy warning that public debt could rise more than forecast this year.
Frankfurt-listed Wirecard AG tumbled 8.7 percent after a Handelsblatt report on an investigation by authorities into fraudulent transactions in the sector.
Utilities edged 0.2 percent higher, while real-estate stocks — a refuge for investors at times of tariff turmoil — rose 0.6 percent.
Athens-traded stocks provided a rare spot of optimism on the day, rising 1.5 percent to a near 13-month peak. The index posted a 7.4 percent gain for last month, aided by news of snap elections being called.
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