G7 tensions push markets lower

On Friday German stocks led a selloff in European markets, with major bourses under pressure as trade tensions between the U.S. and other countries look set to be on full display when leaders of the Group of Seven advanced economies gather in Quebec.

From the corporate front, shares of Deutsche Bank AG and Commerzbank AG fell following a report that Deutsche Bank is exploring a potential merger with its German rival.

Germany’s DAX 30 index dropped 1.1% and France’s CAC 40 fell 0.4%. Italy’s FTSE MIB index slid 1.7% and Spain’s IBEX 35 gave up 0.9%. The U.K.’s FTSE 100 suffered a loss of 0.8%. Overall, the Stoxx Europe 600 Index slumped 0.5%. It was on track for 0.8% weekly decline and that would mark a third straight weekly loss.

The euro bought $1.1768, down from $1.1800 late Thursday in New York. The shared currency was looking at a roughly 1.6% rise this week, finding support after ECB officials indicated policy makers at their June 14 meeting will discuss when to end the central bank’s quantitative-easing program.

European stocks slumped as investors saw a flare-up in tensions between U.S. President Donald Trump and American allies Canada and France before the G7 summit gets under way in Charlevoix, Quebec, on Friday.

Fears of a global trade war have been running on-and-off through financial markets since March when Trump said he’d would protect U.S. steelmakers by slapping tariffs on aluminum and steel imported into the U.S. Those levies have since been implemented against the European Union as well as against countries such as China.

Trump responded to Macron then followed up with other tweets that took aim at Canada and the European Union. The France, Germany, Italy, the U.K., Canada, Japan and the U.S. are the G-7’s members and their summit runs through Saturday.