LONDON (Reuters) - European stocks fell on Wednesday as an escalation in the U.S.-China trade dispute brought a six-session winning streak to an end.
The pan-European STOXX 600 index fell 1.3 percent, while Germany's export-heavy DAX .GDAXI fell 1.5 percent.
The Trump administration raised the stakes in the standoff with Beijing by threatening to impose 10 percent tariffs on a list of $200 billion worth of Chinese imports, a move that hit risky assets globally.
Though investors have been looking positively toward the second-quarter earnings season, the increasingly uncompromising rhetoric on trade has weighed on equities recently.
“It’s getting a bit more real for markets now,” Ken Odeluga, market analyst at City Index, said, referring to the United States’ threat of more tariffs.
“It’s more difficult to dismiss this on the basis that ... little has happened in real terms.”
All European sectors were in negative territory, with those most exposed to action on tariffs taking the most points off the STOXX. Basic resources .SXPP fell 3.3 percent and autos .SXAP dropped 1.7 percent.
With the earnings season about to get into gear, trading updates put individual stocks into focus.
Shares in Indivior (INDV.L) plunged almost a third after the drugmaker said its 2018 profit would come in below its forecast, hurt by the launch of generic versions of its bestselling opioid addiction treatment in the United States.
Micro Focus (MCRO.L) was another large faller, down 9.2 percent after the software company gave a half-year update, with analysts at Investec saying that they still see “material challenges ahead for the business”.
Micro Focus’ shares are down more than 52 percent this year.
Shares in Burberry (BRBY.L) were down 4 percent after the luxury retailer’s first quarter update failed to impress investors, with no outlook hike.
“Cost cuts and other strategic initiatives are still ongoing and should be welcomed by investors,” said Helal Miah, investment research analyst at The Share Centre.
“But strategies, such as taking the brand even more upmarket, have the potential to backfire and alienate traditional customers as we have seen with other brands in the industry,” Miah added.
UK housebuilder Barratt Developments (BDEV.L) rose 3.5 percent after the company said that it expected profits to have risen 9 percent in 2018.
In M&A news, shares in UK broadcaster Sky (SKYB.L) retreated 0.5 percent after Rupert Murdoch’s 21st Century Fox (FOXA.O) said it had agreed a $32.5 billion bid for Sky, trumping a rival offer from U.S. group Comcast (CMCSA.O).
Reporting by Kit Rees and Danilo Masoni; editing by Mark Heinrich