European stocks hit six-week low on Washington announcement of new tariffs

A slump in shares of automakers, miners and chipmakers led European stocks to their biggest losses in more than seven months on Friday after Washington’s announcement of new tariffs on Chinese goods raised fears of a further hit to global growth.

The pan-European STOXX 600 index sank 2.5% to hit a six-week low. Germany's tradesensitive DAX index slumped 3.1%, while losses for luxury goods makers, which draw a large part of their revenue from China, dragged down France's CAC 40 by 3.6%.

Abruptly ending a temporary trade truce between the two countries, U.S. President Donald Trump said on Thursday he would impose a 10% tariffs on $300 billion of Chinese exports to the United States from September 1, prompting Beijing to warn of retaliation.

U.S. stocks suffered the worst week of 2019 as investors fretted over Donald Trump’s escalation of his trade war with China. Treasuries rose, while the yen strengthened.

The S&P 500 fell for a fifth straight day, its steepest weekly loss since December’s sell-off. Trade angst recaptured center stage after Trump said Thursday he’d slap more tariffs on Chinese goods, adding to worries that the spat could derail the global economy. China vowed it would counter the threat. The president ratcheted up his rhetoric late Friday, saying he could boost the levies to a “much higher number.” Stocks were already under pressure after investors groused that the first Federal Reserve rate cut in a decade didn’t come with assurances of further easing.

While China has yet to offer details on what measures it would take, the sudden escalation of the trade war has put markets in a spin in an already action-packed week of corporate earnings and central-bank meetings. The developments come after the Federal Reserve chief cast doubt about a long cycle of interest-rate cuts, provoking the president’s ire and disappointing many investors.