Europe open: Stocks hit by escalating trade tensions, Basic Resources plummet
Stocks are dropping fast after the White House made the most of the window of opportunity afforded by strength in the stockmarket to announce new measures designed to keep up the pressure on China.
Overnight, the US administration announced it had begun to prepare 10% tariffs on a further $200bn-worth of Chinese goods.
Commenting on the potential implications of the latest developments, Louis Kuijs at Oxford Economics said: "we think that China may still try to resume dialogue on taking the sharp edges off the industrial and technology policies that the US, and other countries, object to.
"Such discussions would most likely not defuse the trade war quickly. But they may at least dampen the tendency for further escalation. In the absence of such discussions, the US and China seem set for a more full-blown trade war, with major economic implications for themselves and the global economy."
"Without such talks, further escalation seems unavoidable."
In reaction, as of 1030 BST, the benchmark Stoxx 600 was down by 1.19% or 4.61 points to 381.65, alongside a drop of 1.38% or 174.63 points to 12,436.11 for the German Dax, while the Cac-40 was off by 1.19% or 64.97 points to 5,369.33.
Pacing losses on the former benchmark, the Stoxx 600's gauge of shares in Basic Resources companies was down by 3.23% to 458.05.
Significantly too, the US dollar was again on the front foot against the Chinese yuan, adding 0.60% to 6.6740, alongside a drop of 1.76% for the Shanghai Stock Exchange's Composite Index.
Other major emerging market currencies on the other hand, such as the Argentine and Mexican peso, were in fact trading on the front foot.
Economic news was light on the ground on Wednesday, with Portugal's national statistics office confirming that harmonised consumer prices jumped from a year-on-year rate of gains of 1.4% for May to 2.0% in June.