European shares lower on continued trade tensions

European shares traded lower on Wednesday as trade tensions and growing worries about emerging market currencies cut investor appetite for risky assets.

In the morning the pan-European STOXX 600 was down 0.7 percent, with losses spread across industry sectors and trading centers despite data showing that Euro zone business activity accelerated slightly in August.

A rare glimmer of optimism lifted Italy’s banks, buoyed by deputy Prime Minister Matteo Salvini saying that Rome would “try to be good” with respect to European Union budget rules. Rating agency Scope also issued a note saying that while “volatile politics have reignited fears around Italian banks”, there has been progress on nonperforming loans.

Corporate announcements also triggered strong swings, most notably in French pharmaceutical group BioMerieux which was the best performer on the STOXX 600 index, up by 8.3 percent after better than expected first-half results and a raised 2018 outlook.

Japanese shares fell on Wednesday as worries that a tariff war between China and the United States could escalate weighed on sentiment, while concerns that tourists will shop less due to a typhoon flooding a major airport hit shares in cosmetic makers.

Japan’s Nikkei share average dropped 0.51 percent to 22,581, dropped for a fourth consecutive session following its eight-day winning streak while the broader Topix fell 0.77 percent to 1,705. The Nikkei would have been hit harder if not for a 3.1 percent gain for index heavyweight Fast Retailing, following strong monthly sales data.

Investors were wary of further escalation in trade disputes between Washington and Beijing, with U.S. President Donald Trump poised to impose 25 percent tariffs on $200 billion of imports from China some time after a review period that ends on Thursday.

There were also worries that Canada and the U.S. may not reach a trade deal as officials from two countries meet later in the day.