By Nikhil Sharma
(Reuters) -European shares pared early gains on Thursday after U.S. President Donald Trump threatened to impose tariffs on alcoholic products from the European Union, further aggravating a full-blown global trade war.
The pan-European STOXX 600 was up 0.1% at 1300 GMT, after closing 0.8% higher on Wednesday due to optimism from hopes of a ceasefire in Ukraine and a cooler-than-expected U.S. inflation report.
Trump said on Thursday he would put a 200% wine tariff on all wines and other alcoholic products coming out of EU countries if the bloc did not remove its tariff on whiskey.
Spirits stocks Pernod Ricard and Campari fell 3.5% and 3.1%, respectively.
“He does certainly not want to be known as being weak. That’s basically his nightmare,” said Teeuwe Mevissen, senior market economist at Rabobank.
Mevissen said the latest wine tariffs are symbolic to show that he is ready to escalate the trade war.
Meanwhile, the index of automobiles and parts shed 1.7%. Shares of carmaker Stellantis and car-parts supplier Valeo fell 2% and 4.6%.
Countering losses, heavyweight healthcare stocks jumped 0.7%, boosted by a 3.4% rise in Novo Nordisk. Kepler Cheuvreux raised the drugmaker’s rating to “buy” from “hold”.
Trump threatened on Wednesday to ratchet up a global trade war with further tariffs on European Union goods, just hours after the EU announced retaliatory levies in response to U.S. trade barriers.
The chaos around the implementation of Trump’s trade duties has generated extreme volatility in global markets, with analysts worrying that tariff uncertainties could dent economic growth.
European truck makers declined sharply after the U.S. Environmental Protection Agency’s (EPA) decision to start efforts to reverse the Joe Biden administration’s vehicle emissions rules.
Daimler Truck lost 6% and was set for its worst day on record, while Volvo shed 2.7% and Traton lost 3.1%.
Focus was on Europe’s largest economy, Germany, whose parliament began a special session on Thursday to debate a 500 billion euro fund for infrastructure and sweeping changes to borrowing rules to bolster the country’s defence.
Allegro jumped 12.5% and was set for its best day in nearly two years after the e-commerce platform forecast its 2025 earnings to rise 8%-12% in its home market. The company also proposed a share buyback of around 1.4 billion zlotys ($364 million).
British online trading platform IG Group rose 2.5% after reporting a 12% jump in third-quarter revenue to 268 million pounds ($347 million).
(Reporting by Nikhil Sharma; Editing by Mrigank Dhaniwala and Maju Samuel)
