Europe midday: Markets fall on trade war fears, tobacco stocks gain

European stocks were lower at lunchtime on Thursday, following mixed messages on Sino-US trade even as lawmakers on Capitol Hill passed a bill on Hong Kong that could prove a stumbling block for negotiations.

At 1152 GMT, the Stoxx 600 was down by 0.4% at 402.09, as Germany's Dax dipped by 0.1% to 13,140.81 and the French CAC 40 slid by 0.2% to 5,882.59. Meanwhile, London's FTSE 100 was 0.6% lower at 7,217.02.

Chinese Vice Premier Liu He said in a dinner speech on Wednesday night that he was "cautiously optimistic" about negotiations, but Reuters reported that the signing of an initial deal might not take place this year.

Meanwhile, further progress in Sino-US trade negotiations has been complicated after the US Senate passed legislation aimed at protecting the rights of pro-democracy protesters in Hong Kong.

IG analyst Chris Beauchamp said: "Trump’s likely signing of the Hong Kong bill raises the prospect that the US and China will find something other than trade to quarrel over – if the president was looking for an excuse to renew their trade spat then he has a tailor-made opportunity here to both hit China on trade and present himself as a champion of human rights and democracy.

"For someone so devoted to his public image, especially now the impeachment hearings are piling on the pressure, the opportunity may be too big to pass up."

Among individual stocks, Tobacco companies British American Tobacco and Imperial Brands were in the green after US health regulators shelved measures that would have forced companies to cut nicotine in cigarettes to "non-addictive" levels.

German engineering firm Thyssenkrupp tumbled after scrapping its dividend after its full year net loss widened from €62m to €304m.

Shares in car manufacturer Fiat Chrysler were also lower after US contemporary General Motors lodged a lawsuit against the company and accused it of bribing officials from the United Autoworkers Union.

Danish insurance companies Topdanmark and Tryg both climbed after analysts at Nordea raised their rating for the duo from 'hold' to 'buy'.