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European Auto Stocks Fall on Concern over China's Tariff Response

MILAN, June 13 (Reuters) - Some of Europe's biggest carmakers fell further on Thursday on concerns over how China will respond to new tariffs the European Commission imposed on imported Chinese electric cars to combat what they say are excessive subsidies from Beijing.

By 0940 GMT, Europe's auto index fell over 2% to its lowest in more than four months, while the broader region-wide STOXX 600 was down 0.5%. China-exposed Volvo Car was the biggest decliner, down 6%, followed by German carmakers Porsche AG, Volkswagen, Mercedes and BMW, down between 1.5-3.4%.

"The risk is that China is now also taking actions that would especially hit the German OEMs who are exporting to China," said Stifel analyst Daniel Schwarz.

According to state news agency Xinhua, Beijing hopes the European Union (EU) will reconsider tariffs on Chinese electric vehicles and stop going further in the "wrong direction" to shield its auto industry from competition.

Brussels on Wednesday said it would impose extra duties on imported Chinese electric cars from July, ranging from 17.4% for BYD to 38.1% for SAIC, on top of the standard 10% car duty.

"Our conversations with investors suggested that a tariff increase to ~25%pts was consensus. As such, we see the EC decision to be slightly more hawkish than had been initially expected," Morgan Stanley analysts said.

"We expect sentiment towards German OEMs to stay depressed as this development could cause management teams to talk down FY24/25 numbers toward the lower end of guides," they added.

The U.S. bank said it was particularly cautious on luxury carmaker Porsche, majority controlled by Volkswagen. Porsche was trading at its lowest since listing in 2022.

Auto suppliers were also hit. Paris-listed Forvia and Valeo were down 4.8% and 3.6%, respectively.

Concerns over possible Chinese retaliation spread beyond the auto sector. Shares in French cognac maker Remy Cointreau fell 3.6%. A trade body for French cognac producers on Wednesday expressed deep concern over the EU's tariff decision.

China's commerce ministry warned it could request anti-subsidy investigations into European dairy and pork imports.

Reporting by Danilo Masoni and Ozan Ergenay, editing by Alun John and Bernadette Baum

Source: Reuters

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