By Nikhil Sharma
(Reuters) -European shares extended losses on Tuesday, led by financials following UBS’s quarterly earnings, as investors grew unsettled over fears of a trade war between top global economies, the U.S. and China.
The pan-European STOXX 600 index was down 0.3% as of 0940 GMT. The benchmark had logged its biggest single-day drop in more than one month on Monday.
China announced tariffs on some U.S. imports, starting from Feb. 10, in retaliation for Washington’s 10% additional levies on Beijing, reigniting concerns about a trade war between the economies.
“The key driver right now is the trade tariff and just the uncertainty that seems to be coming with it,” said Fiona Cincotta, senior market analyst at City Index, adding that latest developments will keep the markets “wary of a full-blown trade war erupting”.
Financial Services index dropped 1.2%, dragged by a 5.1% fall in UBS Group despite the Swiss lender beating its fourth-quarter profit forecast. UBS CEO Sergio Ermotti said higher capital requirements in Switzerland would hurt returns for shareholders.
“Those comments would be sufficient to be able to put a dampener on otherwise upbeat numbers because that’s sort of pointing to lower returns going forward,” City Index’s Cincotta said.
Diageo fell 3.6% after the world’s top spirits maker withdrew its medium-term organic sales growth target as it took steps to try and mitigate the impact of U.S. tariffs on its tequila and Canadian whisky.
The stock brought down the food and beverages index by 0.9%. The energy index lost 0.8% as crude prices fell after U.S. tariffs on China took effect.
Telecommunications fell 0.8% as Vodafone dropped 5.6% after the mobile group reported another deterioration in Germany in its third quarter. The stock was the biggest percentage loser on the UK’s FTSE 100, which fell 0.3%.
Embracer shares fell 43.4% ahead of the gaming group’s spin-off by tabletop game publisher Asmodee.
Providing slight relief, U.S. President Donald Trump on Monday agreed to a 30-day pause in 25% tariffs on Mexico and Canada, in return for concessions on border and crime enforcement with the two neighbouring countries.
Trump has also threatened to impose tariffs on the 27-nation European Union, but did not specify when.
Infineon jumped 9.7% after the German chipmaker beat first-quarter revenue estimates and slightly raised its full-year revenue outlook.
The earnings lifted the technology index by 0.5%.
Among other stocks, France’s BNP Paribas rose 2.2% after a forecast-beating jump in net income in the fourth quarter.
(Reporting by Nikhil Sharma; Editing by Mrigank Dhaniwala)
