Europe midday: Stocks extend losses as Trump steps up trade war with China
European stocks had fallen further into the red by midday on Friday as US President Trump said he was ready to slap import tariffs on $500bn of Chinese goods.
Just after midday, the benchmark Stoxx Europe 600 index was down 0.3% to 385.20, Germany's DAX was 0.7% lower at 12,619.12 and France's CAC 40 was 0.6% weaker at 5,384.93.
Markets took another leg lower after CNBC released its full interview with Trump, having only put out the section on the Federal Reserve on Thursday. It turned out that not only did Trump criticise the Federal Reserve's interest rate rises and make it clear he wants a weaker dollar, he also said he was "ready to go to 500" if China doesn't bow to US complaints about its trade policies.
In the part of the interview that was released on Thursday, Trump said he wasn't thrilled with the Fed's interest rate hikes.
"Because we go up and every time you go up they want to raise rates again…I am not happy about it. But at the same time I’m letting them do what they feel is best.
"I don’t like all of this work that we’re putting into the economy and then I see rates going up."
He also attacked the European Union and China over their currency weakness.
Spreadex analyst Connor Campbell said: "Interestingly the forex markets were completely placid. Normally one would expect the dollar to act as something of a safe haven following a trade war flare-up.
"Yet Trump undermined the currency’s recent super strength by attacking the Federal Reserve and its interest rate plans, meaning investors might not feel quite as comfortable cosying up to the greenback this Friday."
In corporate news, Stora Enso tumbled after the Finnish pulp and paper manufacturer said second-quarter net profit rose 49% to €213m.
Steelmaker SSAB tumbled after its second-quarter earnings missed analysts' expectations, but Remy Cointreau gained ground after posting a rise in first-quarter sales despite unfavourable currency movements.
France's Thales nudged up after the defence electronics group reported an increase in first-half profits and said its planned takeover of Gemalto was on track.
Hermes ticked higher after the luxury handbag maker said it expects first-half operating profit to remain near the record levels of last year and posted a 7.2% jump in second-quarter sales.
On the data front, figures from the European Central Bank showed the seasonally-adjusted current account surplus in the eurozone fell to €22.4bn in May from a revised €29.6bn the month before.
Pantheon Macroeconomics analyst Claus Vistesen pointed out that a big decline in the primary income surplus - to €3.0bn from €9.0bn in April - was the main driver of the headline decline in May.
"Elsewhere, the movements were marginal. The goods and services surpluses fell trivially, while the secondary income deficit- mainly foreign aid and workers’ remittances - narrowed slightly. In the 12-month ending May, the overall surplus stood at 3.6% of GDP, 0.4 percentage points higher than in the same period last year."