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Europe: Shares fall as weaker yuan stokes trades worries

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[LONDON] European shares slid again on Thursday as China's retreating yuan exacerbated trade tensions and encouraged investors to sell risky assets and search for stock market safe havens.

After clawing back some ground on Wednesday, the pan-European STOXX 600 and Germany's trade-sensitive DAX were down 0.9 and 1.4 per cent respectively, with technology and carmakers taking the biggest hits.

"Investors are cashing in on yesterday's gains, as trade tensions remain alive and well," wrote David Madden, an analyst for CMC Markets, adding a lasting recovery for stocks was unlikely without tangible progress on trade negotiations.

Tech stocks were the worst performers, falling 2.6 per cent as concerns over tariffs spread to a sector thus far considered relatively resilient to trade disruptions.

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Chipmakers STMicro, Infineon and ASML were among the biggest decliners, falling 5.1 per cent, 4.2 per cent and 2.9 per cent respectively.

Asian tech stocks had sold off overnight after threats from US President Donald Trump to curb Chinese investment in US tech firms.

The auto sector index fell 2.4 per cent as a profit warning from lighting firm Osram renewed anxiety over auto tariffs and their impact.

Osram plunged over 20 per cent after it said restrictions on trade and sales affecting auto manufacturers had created "noticeable uncertainty".

"The trade tariff pain is clearly starting to come to the fore in companies connected to autos," one trader wrote.

A rare bright spot was high dividend-paying consumer staples stocks, including Nestle and Unilever, which gained as they are considered safer in times of market stress.

REUTERS