Europe close: Trade tensions with China weigh on stocks

European stocks dipped on Wednesday after US President Donald Trump threatened China with higher tariffs, while US support for protesters in Hong Kong added to concerns about relations between the two nations.

"Today has seen widespread pessimism throughout the global financial markets, with Asian and European stock market weakness being transmitted into the US open," said IG's Josh Mahony.

"Chief amongst the concerns for markets is the tiresome issue of US-China trade relations, with the Senate passing a controversial Hong Kong bill which will further strain US-China relations away from the negotiating table."

The benchmark Stoxx 600 index was 0.41% lower at 403.82, while Germany's DAX was down 0.48% at 13,158.14 and France's CAC was 0.25% weaker at 5,894.03.

Trump said at a cabinet meeting on Tuesday evening that he would raise tariffs on China "even higher" if a trade deal between the two countries is not agreed.

Meanwhile, the US Senate's passing of a bill overnight to protect human rights in Hong Kong added to concerns about souring relations between the US and China.

If signed into law, the Hong Kong Human Rights and Democracy Act will demand sanctions on Chinese and Hong Kong officials identified by the US as carrying out alleged human rights abuses. China was quick to condemn the bill, calling on the White House to block it.

Foreign Ministry spokesman Geng Shuang said: "This bill neglects facts and the truth. It applies double standards and it is overt meddling in Hong Kong's affairs and China's internal affairs. This is a serious violation of the international law and fundamental norms regulating international relations. China condemns this and speaks out against this decisively."

He added that China "will be forced to take resolute countermeasure for protectings its national sovereignty".

In corporate news, shares of German payments company Wirecard slumped after it said that restrictions imposed by Singapore authorities meant the local auditor was unable to conclude its 2017 audit.

B&Q and Castorama owner Kingfisher was sharply lower after it reported a "disappointing" 3.2% fall in third-quarter sales in softer markets as the company's chief executive said it was suffering from "organisational complexity" that ignored customers.

Swedbank was in the red following reports that US authorities are looking into whether its Baltic unit allowed money transfers that violated US sanctions against Russia.