Global Trade Tensions Rattle European Shares

European shares fell to a two-month low, led by German equities, as new U.S. tariffs intensified trade tensions. The STOXX 600 and Wall Street futures declined as investors shifted to safe-haven assets, and euro zone banks dropped amid interest rate cut speculation. Defensive sectors saw some gains.

European stocks tumbled to a two-month low on Thursday, with Germany's trade-sensitive market suffering the most. This downturn came as the United States imposed new tariffs, exacerbating the global trade war and sparking economic slowdown concerns.

The pan-European STOXX 600 index fell 1.7% at 0712 GMT, while German equities saw a 2.4% drop—leading regional market losses. Wall Street futures dropped 3.1%, as investors pivoted from riskier assets to safer options like bonds and gold. In a recent move, U.S. President Donald Trump imposed a 10% tariff on most imports, raising levies on the EU and China, prompting them to vow counteractions.

Euro zone banks, heavily influenced by economic forecasts, decreased by 3.1% amid growing expectations of interest rate cuts from the European Central Bank, despite inflation risks from trade tensions. Meanwhile, defensive sectors including utilities, food and beverages, real estate, and healthcare posted slight gains.

(With inputs from agencies.)