European shares decline as trade war fears loom; UBS slides (updated)

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04/02/2025 10:06

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        * 
      UBS Group falls despite profit beat
    

        * 
      Vodafone falls as Germany performance worsens
    

        * 
      Infineon rises after better-than-expected Q1, positive
guidance
    

        * 
      Diageo falls after withdrawing medium-term goals
    

        * 
      STOXX down 0.3%
    

  
 (Updates with morning prices)
    By Nikhil Sharma
       Feb 4 (Reuters) - European shares extended losses on
Tuesday, led by financials following UBS's quarterly earnings,
as investors grew unsettled over fears of a trade war between
top global economies, the U.S. and China. 
    The pan-European STOXX 600 index  .STOXX  was down 0.3% as
of 0940 GMT. The benchmark had logged its biggest single-day
drop in more than one month on Monday.
    China announced tariffs on some U.S. imports, starting from
Feb. 10, in retaliation for Washington's 10% additional levies
on Beijing, reigniting concerns about a trade war between the
economies.
    "The key driver right now is the trade tariff and just the
uncertainty that seems to be coming with it," said Fiona
Cincotta, senior market analyst at City Index, adding that
latest developments will keep the markets "wary of a full-blown
trade war erupting".
    Financial Services index  .SXFP  dropped 1.2%, dragged by a
5.1% fall in UBS Group  UBSG.S  despite the Swiss lender beating
its fourth-quarter profit forecast. UBS CEO Sergio Ermotti said
higher capital requirements in Switzerland would hurt returns
for shareholders.
    "Those comments would be sufficient to be able to put a
dampener on otherwise upbeat numbers because that's sort of
pointing to lower returns going forward," City Index's Cincotta
said.
    Diageo  DGE.L  fell 3.6% after the world's top spirits maker
 withdrew its medium-term organic sales growth target as it took
steps to try and mitigate the impact of U.S. tariffs on its
tequila and Canadian whisky.
    The stock brought down the food and beverages index  .SX3P 
by 0.9%. The energy index  .SXEP  lost 0.8% as crude prices fell
after U.S. tariffs on China took effect.
    Telecommunications  .SXKP  fell 0.8% as Vodafone dropped
5.6% after the mobile group reported another deterioration in
Germany in its third quarter. The stock was the biggest
percentage loser on the UK's FTSE 100  .FTSE , which fell 0.3%.
        Embracer  EMBRACb.ST  shares fell 43.4% ahead of the
gaming group's spin-off by tabletop game publisher Asmodee.
    Providing slight relief, U.S. President Donald Trump on
Monday agreed to a 30-day pause in 25% tariffs on Mexico and
Canada, in return for concessions on border and crime
enforcement with the two neighbouring countries.
    Trump has also threatened to impose tariffs on the 27-nation
European Union, but did not specify when.
    Infineon  IFXGn.DE  jumped 9.7% after the German chipmaker
beat first-quarter revenue estimates and slightly raised its
full-year revenue outlook.
    The earnings lifted the technology index  .SX8P  by 0.5%.
    Among other stocks, France's BNP Paribas  BNPP.PA  rose 2.2%
after a forecast-beating jump in net income in the fourth
quarter.



 (Reporting by Nikhil Sharma; Editing by Mrigank Dhaniwala)
 ((Nikhil.Sharma@thomsonreuters.com;))