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Europe: Shares hit by fresh Italian scare, Daimler tariff hit


[LONDON] European shares ended the day deep into the red after an early bounced on Thursday, shaken by the appointment of eurosceptics at key positions in the Italian parliament and after German carmaker Daimler warned higher tariffs would hit profits.

The autos sector fell 3.5 per cent, its biggest loss in about two years, while the pan-European Stoxx 600 tumbled 0.9 per cent as fears about the ongoing US-China trade dispute lingered on.

"The standoff between the US and China is not any closer to being resolved and traders are fearful President Trump will turn up the heat on the EU (European Union) next," said David Madden, a market analyst at CMC Markets.

Equity markets have been relatively resilient in the face of mounting trade concerns but fell broadly this week as Mr Trump threatened additional tariffs on US$200 billion worth of Chinese goods.

Daimler became one of the biggest global companies to cut its guidance on trade tensions, warning profits would be hit in part by Chinese tariffs on car imports from the United States.

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Daimler shares fell 4.3 per cent to their lowest in nearly two years.

Some analysts were sceptical of Daimler's timing, saying the profit warning may be more driven by internal pressures than the external trade environment.

But UBS analysts said they expected consensus earnings estimate downgrades of 5 to 7 per cent for the carmaker.

Volkswagen fell 3.1 per cent and BMW 2.9 per cent while Germany's DAX, which counts many heavy exporters among its constituents, underperformed the STOXX 600 with a 1.4 per cent slump.

Financials stocks were the biggest drag in Europe after two leading eurosceptics from Italy's far-right League were named to head parliamentary finance committees.

Italy's FTSE MIB fell 2 per cent with the country's banking index down 2.2 per cent, while Italian bond yields rose amid renewed fears about the new populist government.

University professor Alberto Bagnai, who was named head of the Finance Committee in the Senate, published "Il tramonto dell'euro" ("The sunset of the euro") in 2012.


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