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Europe: Shares fall further as China responds to US tariffs


[MILAN] European shares fell for a second day after China unveiled new tariffs against US products, increasing concerns of an escalating trade standoff between the two countries.

China hit back quickly on Wednesday against US plans to impose tariffs on US$50 billion in Chinese goods, retaliating with a list of similar duties on key American imports including soybeans, planes, cars, beef and chemicals.

The pan-European Stoxx 600 index and Germany's exporter-heavy DAX fell 0.5 and 0.4 per cent respectively, suffering their second straight day of losses.

Both however ended off earlier lows following an initial kneejerk reaction.

Market voices on:

"Investors might expect further escalation, but we must come back to the view that this process has all the hallmarks of a Trump negotiation where we see the president back down from the worst case scenario in return for key concessions," said ETX Capital analyst Neil Wilson.

Later on Wednesday, US President Donald Trump's top economic adviser Larry Kudlow said people should not overreact to the trade actions and said they should be seen as "a negotiation, using all the tools".

The basic resources and tech sectors were worst performers with falls of 2.4 and 1.7 per cent respectively, while cyclical stocks such as financials and industrials also weighed heavily.

Even though trade war concerns dampened the broader sentiment, traders said some European companies such as Airbus or Adidas could get a competitive edge against US rivals in Chinese markets as a result of the tariffs.

Airbus shares fell 0.8 per cent, outperforming heavy losses in its US rival Boeing, while Adidas rose 1.3 per cent, broadly in line with gains in US peer Nike.

Elsewhere among individual stocks, WPP fell 2 per cent after the advertising group said it was conducting an investigation into an allegation of personal misconduct against its chief executive, Martin Sorrell, who denied any wrongdoing.

Swiss Re fell 3.9 per cent after the reinsurer said Japan's SoftBank was in talks to buy a stake which is unlikely to exceed 10 per cent.

Bloomberg reported on March 29 that SoftBank was looking to buy a 25 per cent stake in Swiss Re, worth about US$9.6 billion, as part of its drive to broaden its investments, which include its US$93 billion Vision Fund for technology projects.

German IT leasing specialist Grenke rose 3.5 per cent after a positive trading update for the first quarter.