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(Sharecast News) - European shares were lower on Friday as a raft of downbeat corporate earnings citing the impact of US tariffs hit sentiment, putting the benchmark Stoxx 600 under pressure.
The index was down 0.45% at 549 in early deals with all major bourses following suit. Germany's DAX fell 0.73% and France's CAC 40 was flat.
With a deadline of August 1 looming for the European Union to strike a trade deal with the US or face 30% tariffs, traders are looking for any signs of corporate stress to gauge the economic impact on equities.
"A more hawkish than expected ECB has soured the mood for European equities, after Christine Lagarde quashed hopes that the ECB will cut rates again in September. The interest rate futures market is pricing in a 15% chance of a rate cut in September, down from a 42% chance before Thursday's ECB meeting," said XTB research director Kathleen Brooks.
"There was also some earnings disappointment, with LVMH reporting weaker sales, as consumers continued to shun LVMH's luxury pricy brands, however, its share price is rising on Friday, as hopes rise for a turnaround in the future."
In economic news, German business sentiment improved less than expected in July, according to a survey released on Friday by the Ifo Institute.
The business climate index rose to 88.6 from 88.4 in June, coming in below expectations for a reading of 89.0.
In equity news, auto giant Volkswagen slipped as it cut guidance and reported a sharp fall in second-quarter profit, as it felt the impact of US tariffs.
Car parts maker Michelin fell after posting a bigger-than-expected 27.8% slump in first-half net income, blaming the threat of tariffs for a sharp decline in North and Central America although it retained full year guidance.
Puma shares tanked as the German sports apparel flagged a full-year loss, citing lower sales and tariffs.
Valeo slumped after the French car parts supplier cut its full-year sales outlook.
European food retail giant Carrefour bucked the trend after reporting upbeat half-year results.
Reporting by Frank Prenesti for Sharecast.com