Europe midday: Stocks lower on trade, German political concerns

Stocks on the Continent are trading near their worst levels of the session, weighed down by concerns that the trade spat between China and the US might be set to escalate.

On Friday evening, Beijing responded in kind to the Trump administration's decision to levy tariffs on $50bn-worth of goods and now markets were waiting on the response from Washington.

A second round of 'tit-for-tat' tariffs on $100bn-worth of goods by both nations could cut each country's rate of GDP growth by between 0.3-0.4%, analysts at Oxford Economics said.

Commenting on the potential damage that might arise from such measures, Rebecca O'Keeffe at Interactive Investor said: "The current position on tariffs is unlikely to cause a full-blown rout for markets, but the prospect of further escalation and reprisals could cause considerable damage to the global economy, increasing the risks and anxiety."

As of 1359 BST, the benchmark Stoxx 600 was falling by 0.94% or 3.65 points to 385.49, alongside a retreat of 1.33% or 172.99 points to 12,837.68 for the German Dax and a drop of 1.25% or 68.57 points to 5,433.31 in the Cac-40.

The FTSE Mibtel meanwhile was off by 0.72% or 162.28 points at 22,025.60.

Meanwhile, and on the political front, concerns were that a growing row between German government coalition partners CDU and CSU over immigration might see Chancellor Angela Merkel ousted or her leadership seriously undermined.

In order to resolve the dispute with her interior minister from the CSU, Horst Seehofer, who had threatened to block immigrants who had already registered in other European Union countries at the German border, Merkel had proposed agreeing on a common EU-wide stance at the bloc's 28-29 June summit.

Analysts at Rabobank believed that a falling out between the CDU and CSU was unlikely; indeed, Seehofer's theatrics might be an attempt to head off the far-right AfD before regional elections in October, they said.

Shares of Siemens were lower despite news that the engineering group had secured a £1.5bn contract to build 4 trains for the Piccadilly Line.