- Michelin shares drop after cutting annual forecast
- US-China trade tensions impact European market sentiment
- Ericsson shares rise on strong earnings
Oct 14 (Reuters) - European stocks dipped on Tuesday on renewed worries about U.S.-China trade tensions and as Michelin's shares slid to a more than two-year low after the French tyre maker cut its annual forecast.
The pan-European STOXX 600 index was down 0.5% as of 0839 GMT, hitting a near two-week low following a short-lived bounce on Monday.
Global stocks sold off sharply on Friday after U.S. President Donald Trump threatened to impose additional 100% tariffs on Chinese goods over Beijing's rare earths export controls. While Trump struck a more conciliatory tone over the weekend, both the countries on Tuesday began charging additional port fees on ocean shipping firms that move everything from holiday toys to crude oil.
"Fears over renewed trade friction between the two largest economies are definitely hitting sentiment. What we're seeing today is the market fretting over the outlook for the global economy," said Fiona Cincotta, senior market analyst at City Index.
Economy-sensitive miners fell the most among European sectors, down 2%.
The broader auto index dropped 1.6% as Michelin slid 9% after it cut its full-year outlook, citing worse-than-expected business conditions in the North American market. German car parts maker Continental dropped 3.9%, while Italian tyre maker Pirelli dropped 2.2%.
"It (auto sector) gives us a lot of information outside of what that company is experiencing. It gives us information about how tariffs are impacting the sector, consumer demand for big ticket purchases and also clues about how demand is in other regions. It is going to be a pretty key sector to watch," said City Index's Cincotta.
On the flip side, Swedish telecoms equipment maker Ericsson soared 14.7% after it reported a better-than-expected rise in quarterly earnings and played down the impact of U.S. tariffs.
Overall, third-quarter earnings for STOXX 600 companies are seen dipping 0.2% on average, as per LSEG IBES data published a week ago, a stark contrast with the 12.5% earnings growth expected before Trump for a wide array of tariffs in February. Still, it is an improvement from the 0.6% fall analysts expected last month.
All eyes will be on quarterly results from big U.S. financial companies including JPMorgan Chase, Goldman Sachs, Citigroup, Wells Fargo and BlackRock.
The ZEW's economic sentiment index for October is also due later in the day.
Among other stocks, UK-listed budget airline easyJet jumped as much as 11.5%, with traders citing a report in Italian media of possible interest from global container shipping company Mediterranean Shipping Company, which has denied any involvement in the potential acquisition.
EasyJet shares were last up 3.3%.
Reporting by Sruthi Shankar in Bengaluru; Editing by Sonia Cheema and Mrigank Dhaniwala
Source: Reuters