By Nikhil Sharma
(Reuters) -European shares joined a global market selloff on Tuesday after U.S. tariffs on Canada, Mexico and China took effect, raising concerns that similar levies could be imposed on Europe.
The pan-European STOXX 600 index was down 0.8% at 0933 GMT, retreating from the previous session’s record high. Germany’s blue-chip index also came off record peak, falling about 1.6%.
Tariff actions came hours after U.S. President Donald Trump said that all three countries had failed to do enough to stem the flow of the deadly fentanyl opioid and its precursor chemicals into the U.S.
Last week, Trump floated a 25% tariff on cars and other goods from the European Union.
“He hasn’t given too much details, but said that they are going to come. So again, markets are good to be cautious and we’re going to see that cautious turn for a while,” said Daniela Hathorn, senior market analyst at Capital.com.
Shares of automakers, which are vulnerable to trade duties, declined on Tuesday, with Stellantis dropping 5.1%, BMW losing 4.5% and Porsche down 2.7%.
The sub-index of automobiles and components sank 3.4% to a near three-week low.
The Euro STOXX volatility index surged above 20 points for the first time since December 20, indicating traders might be seeking shelter from potential market turbulence induced by Trump’s tariffs.
China-exposed luxury stocks Hermes, Kering, LVMH and fell between 1.6% and 3.4% after Trump doubled duties on Chinese goods to 20%.
China swiftly retaliated by announcing 10%-15% levies on certain U.S. imports from March 10, aggravating a trade war between the world’s top two economies.
Oil and gas index tumbled 3.4%, as it tracked the downward trend in global crude prices on planned OPEC+ output increase and worries about global trade war. [O/R]
In contrast, the region-wide aerospace and defense index eased from a fresh intraday record high to trade 0.4% higher, after Trump paused military aid to Ukraine, reinforcing that European countries may need to increase their defense spending.
Shares in Rheinmetall, which provides parts for the Leopard 2 tank, were up 1.5%, while sensor maker Hensoldt soared 11.5%.
In other stocks, Thales rose nearly 9% after the defence and technology group posted stronger-than-expected 2024 earnings, despite losses in its space division.
Fresenius Medical Care fell 7.1% after the German healthcare group Fresenius SE sold a part of its stake in the dialysis firm.
Switzerland’s Lindt & Spruengli rose 5.6% after the company reported a slightly better-than-expected full-year operating profit.
(Reporting by Nikhil Sharma; Editing by Sherry Jacob-Phillips and Shinjini Ganguli)
