European shares rose on Friday but were on track for their biggest weekly fall in three months, as escalating global trade tensions fanned fears of an economic slowdown.
The pan-continental STOXX 600 was up 0.4 per cent as of 0950 GMT, and down about 2 per cent for the week so far.
The benchmark index had ended lower on Thursday after US president Donald Trump threatened to slap a 200 per cent tariff on wine and other alcohol from the European Union in response to the bloc’s levies on US whiskey.
Trump’s flip-flops on tariffs have roiled global markets, rattling investors and consumers.
He upped his tariff onslaught this week as soon as major US trading partners retaliated against the trade barriers erected by Washington.
“The ongoing uncertainty about tariffs…is raising questions about the outlook for growth and that’s having a particular impact on risky assets generally,” said Richard Flax, chief investment officer at Moneyfarm.
The aerospace & defence sector led the gains with a 1.8 per cent jump on Friday. The sub-subindex up 2 per cent for the week, extending its rally on prospects of higher military spending by Europe.
Some investors remained optimistic despite the trade war gloom, particularly because of the progress around the ceasefire in Ukraine and Germany’s plans to approve a €500 billion fund to revive growth and ramp up military spending.
Russian president Vladimir Putin on Thursday confirmed his support for ceasefire proposal, but first, a number of crucial conditions need to be worked out or clarified.
Technology and basic resources gained 1.3 per cent and 1.1 per cent on Friday, respectively.
Media index, on the other hand, fell 0.7 per cent, dragged down by a 7.6 per cent drop in Universal Music Group (UMG) after Bill Ackman’s Pershing Square cut its stake in the company.
STOXX 600’s retail index was the biggest loser for the week, falling 5.7 per cent so far.
BMW fell 1.8 per cent after the carmaker’s net profit slumped by over a third in 2024 to €7.68 billion ($8.32 billion).
Kering slumped 11 per cent after its Italian luxury brand Gucci appointed Georgian designer Demna as its artistic director.
On the economic front, German inflation unexpectedly fell in February, building a case for further policy easing by the European Central Bank.
Investors also closely monitored Portugal after president Marcelo Rebelo de Sousa on Thursday called to hold an early parliamentary election, two days after the centre-right minority government lost a parliamentary confidence vote. – Reuters
