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European shares sink after Trump trade threats

European shares sink after Trump trade threats
The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, July 31, 2019. REUTERS/Staff -
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(Reuters) – European stock indexes lost up to 2% in value in early deals on Friday as U.S. President Donald Trump’s warning of new tariffs on China sank stock markets worldwide and sent trade-sensitive sectors like mining and carmakers into a tailspin.

Abruptly ending a temporary trade truce between the two countries, Trump said he would impose a 10% tariffs on $300 billion (£248.1 billion) of Chinese exports to the United States from September 1.

Spooking investors further, Bloomberg reported that Trump is scheduled to make a statement on trade with the European Union at 1745 GMT on Friday.

By 0711 GMT, the pan-European benchmark stocks index STOXX 600 <.STOXX> was down 1.6% with the basic material sector plunging 4.3%, followed by the auto <.SXAP> and tech sectors <.SX8P> both down more than 2.5%.

Germany’s DAX, often regarded as among the most sensitive markets to trade nerves, fell 2% while France’s CAC 40 fell similarly.

Italian tyremaker Pirelli <PIRC.MI> added to the car industry woes, slipping 4.7% after it cut revenue guidance for the second time this year, the latest of a string of suppliers to be hit by a broader auto industry downturn.

The trade escalation spurred flight to safer asset which saw rally in German bonds, whose yields hit all time lows.

(Reporting by Susan Mathew in Bengaluru)

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