European stock indexes lost up to 2.0 per cent in early trading on Friday after US President Donald Trump said he will impose more tariffs of Chinese goods.
Abruptly ending a temporary trade truce between the two countries, Trump said he would impose a 10 per cent tariffs on 300 billion US dollar of Chinese exports to the United States from September 1.
Spooking investors further, Bloomberg reported that Trump is scheduled to make a statement on trade with the European Union at 1745 GMT on Friday.
By 0711 GMT, the pan-European benchmark stocks index STOXX 600 was down 1.6 per cent with the basic material sector plunging 4.3 per cent.
Germany’s DAX, often regarded as among the most sensitive markets to trade nerves, fell 2.0 per cent while France’s CAC 40 fell similarly, reports Reuters.
Italian tyremaker Pirelli added to the car industry woes, slipping 4.7 per cent after it cut revenue guidance for the second time this year, the latest of a string of suppliers to be hit by a broader auto industry downturn.
The trade escalation spurred flight to safer asset which saw rally in German bonds, whose yields hit all time lows.