Europe midday: Shares mixed as US tariff uncertainty hits sentiment

(Sharecast News) - European shares were lower on Tuesday as uncertainty over US tariff policy continued to hit sentiment and traders looked for any progress on an EU trade deal with Washington.

The pan-regional Stoxx 600 index was down 0.06% at 543 in early deals with Germany's DAX outperforming with a 0.57% gain and the UK's FTSE 100 up 0.13%.

Traders are waiting to see whether the EU will reach a deal with Washington on trade, a day after US President Donald Trump slapped a raft of new tariff threats on major Asian players such as Japan and South Korea.

Trump also signed an executive order on Monday, extending the date on which the "reciprocal" tariffs will take effect to August 1, from the previous deadline of July 9. However, he said the new cut off date could be shifted if countries made proposals.

Interactive Investor head of markets Richard Hunter said US markets had come off recent highs "as investors gave the thumbs down to the latest round of tariff threats".

"Optimism was predicated on hopes that the worst of the trade tensions had passed, giving relief to global economic prospects and with limited damage visible thus far on the measures already taken," he said.

"This is now being tested again as the president confirmed that several letters had been sent to countries where there is a trade imbalance, most notably with the likes of Japan, South Korea and South Africa."

"The further extension of the tariff deadline serves only to kick the can down the road. The fact remains that there will be some economic imbalances which could be far reaching, and investors are likely to remain skittish until such time as the clouds clear."

In equity news, Swedish investment firm Kinnevik jumped after reporting a sharp improvement in year-on-year profit in the second quarter.

Zealand Pharma gained 3.5% after Barclays initiated coverage of the Danish biotechnology company with an "overweight" rating.

Reporting by Frank Prenesti for Sharecast.com