European shares tumble amid trade tensions

European shares dropped broadly on Thursday as investors shunned risky assets while waiting to see whether United States and China manage to avoid a trade war which would damage the global economy.

The pan-European STOXX 600 index had dropped 0.7 percent by 0720 GMT, touching a fresh four-week low.

U.S. President Donald Trump said on Wednesday that China “broke the deal” it had reached in trade talks with the United States, and vowed not to back down on imposing new tariffs on Chinese imports.

As the world’s largest economies resume two-day trade talks on Thursday in Washington, investors were on the edge to see if a last minute truce could avert a sharp increase of tariffs on $200 billion worth of Chinese goods on Friday.

More than seven major sectors lost above 1 percent. Tariff-exposed auto stocks slid 1.6 percent decline while semiconductor stocks also lost ground.

Adding to chipmaker’s woes was Intel Corp’s uninspiring full year outlook.

Losses in heavyweight bank stocks weighed the most, with results from some of the biggest Italian banks in focus.

Italy’s third largest lender, Banco BPM dropped nearly 6 percent after reporting a halving of loan-loss provisions for the first quarter.

Meanwhile, the country’s biggest bank by assets UniCredit dipped even after it reiterated its 2019 targets and posted a net profit above analyst expectations.

Among the biggest decliners were shares of ArcelorMittal after the world’s largest steelmaker cut demand forecast for its key markets and said it was facing the twin challenges of lower steel prices and reduced consumption in Europe.

German wholesaler Metro slid after reporting another quarter of falling sales at its Russian business and its Real hypermarkets, which the company is in the process of selling.

Swiss drugmaker Novartis dipped on a deal to buy Takeda Pharmaceutical’s eye drug assets for $3.4 billion.

Shares of Norway’s Equinor came under pressure after wage talks between Norwegian oil firms and their employees broke down.

Investors sought safety in defensive stocks such as telecom, utilities and real estate which eked out the smallest losses.

Germany’s Rheinmetall was the top percentage gainer on the STOXX 600 after it confirmed its outlook and reported a rise in revenue in the first quarter, mainly driven by its booming defense unit.