- OECD trims global growth forecast
- Banks, miners lead broader declines
- Julius Baer falls after more cost cut plans
- Pennon down after annual pretax loss
June 3 (Reuters) - European shares dropped on Tuesday, weighed down by economically-sensitive bank and mining stocks as investors awaited updates on the trade war clouding global growth.
The pan-European STOXX 600 reversed early gains to fall 0.5% by 0830 GMT, extending Monday’s losses, as banks dropped 1.4% and miners slumped 2.3%.
The Paris-based Organisation for Economic Cooperation (OECD) and Development trimmed its global growth outlook and said the trade war was taking a bigger toll on the U.S. economy than before.
"The OECD forecasts is going to cause a great deal of concern.... a lot of people were thinking maybe inflation is behind us, but big concern now is about what happens next," said Danni Hewson, head of financial analysis at AJ Bell.
The news comes ahead of a flash estimate of euro zone inflation numbers and the European Central Bank's monetary policy meeting this week.
Anxiety over how U.S. President Donald Trump's tariffs would be implemented after they ran into legal hurdles last week still prevailed after the administration asked an appeals court to pause a second court ruling.
However, the administration pushed countries for their best trade offers by Wednesday and said that Trump and his Chinese counterpart will likely speak this week amid escalating trade tensions, a sign that trade negotiations were on the horizon.
"Markets feel like they're on the Trump tariff roller coaster at the moment.... The biggest problem is that it always feels like it's one step forward, 2 steps back," said Hewson.
Defensive stocks were in a bright spot with utilities <.SX6P> and telecom advancing.
Meanwhile, Dutch far right leader Geert Wilders said his PVV party would leave the governing coalition, toppling the rightwing government and likely leading to new elections.
Stocks in Netherlands were down 0.6%, largely in-line with declines in regional bourses.
Among individual names, British water utility Pennon Group fell 2.1% after it swung to an annual pretax loss.
UBS gained 2% after Jefferies upgraded the bank's stock to "buy" from "hold".
Julius Baer slipped 1.9%. The Swiss bank announced further cost-saving measures amounting to 130 million Swiss franc ($159.02 million) by 2028.
Real estate investment trust Cofinimmo gained 2.9% after announcing a merger with healthcare real estate firm Aedifica.
Reporting by Purvi Agarwal and Sanchayaita Roy in Bengaluru; Editing by Janane Venkatraman
Source: Reuters