- STOXX 600 drops 1%
- Luxury and auto indexes tumble
- Euro zone volatility spikes
Jan 19 (Reuters) - European shares fell on Monday after President Donald Trump threatened additional tariffs on eight European countries until the U.S. was allowed to buy Greenland, reigniting trade tensions and casting doubt on earlier deals.
The pan-European STOXX 600 fell 1% by 0932 GMT, in a gloomy start to a week packed with earnings and the World Economic Forum in Davos, which will be scrutinised for tariff cues and geopolitical signals.
France's CAC 40 index, Germany's DAX and London's blue‑chip FTSE 100 dropped 1.4%, 1.2% and 0.5%, respectively.
Trump said he would impose an additional 10% tariff starting February 1 on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and Britain. It will rise to 25% on June 1 if no deal is reached, he said.
The threats have triggered a sharp pushback in Europe, where officials are discussing how to deter Trump, while also drafting potential countermeasures.
The market moves underline how disruptive tariff threats remain as the U.S. president wields them as a policy lever, including against countries that have already struck trade agreements with Washington.
"The rationale for higher tariffs is now even more political and less economic than in the first half of 2025," ING economists said in a note.
LUXURY AND AUTOS PLUNGE, VOLATILITY RISES
Luxury, automobile and technology stocks were among the biggest losers, slipping 3.1%, 2.4% and 2.2%, respectively. The luxury and auto indexes hit their lowest in nearly three months.
A gauge for euro zone equity volatility rose 3.39 points to its highest since November.
"Trump's actions over the weekend have inflamed geopolitical risks while also reintroducing trade uncertainty. After a low-volatility start to the year, equities may experience some downside pressure," said Kyle Rodda, senior financial market analyst at Capital.com.
The reaction could also be exaggerated due to thin trading volumes because of the Martin Luther King Jr. Day holiday in the U.S., he said.
Meanwhile, shares of pharmaceuticals and agriculture group Bayer rose 7.1% to their highest since October 2023 after the U.S. Supreme Court agreed to hear the company's bid to sharply limit lawsuits claiming that its Roundup weedkiller caused cancer.
Reporting by Niket Nishant in Bengaluru; Editing by Subhranshu Sahu and Harikrishnan Nair
Source: Reuters