Europe midday: Shares slide on EU tariff fears after latest Trump salvo

(Sharecast News) - European shares were sharply lower on Friday as US President Donald Trump fired the latest salvo in his global trade war, this time threatening to slap Canada with 35% tariffs, while traders were awaiting a letter from Washington on possible levies on the European Union.

The pan-regional Stoxx 600 index was down almost 1% at 547.5 with Germany's DAX 1.17% lower and France's CAC 40 declining by 1.03%.

Trump said Canada faced the duties separate from those already placed on the steel, auto and copper sectors. Investors are also awaiting a letter from Washington outlining proposed tariffs for the EU.

"Donald Trump is rattling sabres in his trade war again, causing more nervousness to creep into sentiment. The baseline assumption is that these will eventually be negotiated down, and that's it's a tactical ploy," said Hargreaves Lansdown analyst Susannah Streeter.

"Nevertheless, there is plenty of weariness around about the more fractured nature of trade relationships in the Trump era."

"There had been hopes that the EU had inched closer to a deal with the US, but it remains elusive for now, with the president telling leaders to expect a letter detailing new tariffs terms today or tomorrow."

In economic news, UK GDP shrank 0.1% in May, according to official data, the second monthly contraction and below the 0.1% expansion forecast by economists.

In equity news Gjensidige Forsikring surged as the Norwegian insurer posted a jump in second-quarter earnings, while compatriot DNB Bank slumped after missing profit forecasts for the same period.

BP gained after reporting higher-than-forecast upstream production in the second quarter.

Storebrand rose after the Norwegian savings and insurance group reported an improvement in its combined ratio in the second quarter.

Reporting by Frank Prenesti for Sharecast.com