European shares fall as the euro surges
European shares fell yesterday as a late surge in the euro and diplomatic tensions with Russia more than offset hopes that the protectionist shift in US trade policy may be more selective and tactical than first feared.
The regional STOXX 600 benchmark fell 0.7pc to its lowest level since February 2017, having earlier gained as much as 0.6pc following reports the United States and China had quietly started negotiations to improve US access to Chinese markets.
"Exemptions on steel/aluminium tariffs have already been granted for other important trade partners, which suggests the US President is using this approach more for negotiating leverage rather than any real intention to start a global trade war", said Accendo Markets head of research Mike van Dulken. He noted that China's response so far was "measured" and "nuanced".
European equity markets however slipped into negative territory as the euro gained further strength. Traders said sentiment was also dented by growing diplomatic tensions between Western countries and Russia.
"Despite a bright opening in the US, with Wall Street seeing early gains of over 1.5pc, increased geopolitical tensions with Russia ensured that volatility was alive and kicking," said Fiona Cincotta, senior market analyst at City Index.
The United States said yesterday it would expel 60 Russian diplomats, joining governments across Europe punishing the Kremlin for a nerve agent attack on a former Russian spy in Britain that they have blamed on Moscow.
A sales trader at a European brokerage however said he did not see how these tensions could have any big impact on global economic growth. Stocks exposed to Russia were mixed. (Reuters)