June 28, 2018 / 7:36 AM / 4 months ago

European shares fall as weaker yuan stokes trades worries

LONDON (Reuters) - European shares slid again on Thursday as China’s retreating yuan exacerbated trade tensions and encouraged investors to sell risky assets and search for stock market safe havens.

Main WSE index WIG20 is seen at the Stock Exchange in Warsaw, Poland June 1, 2018. Picture taken June 1, 2018. REUTERS/Kacper Pempel

After clawing back some ground on Wednesday, the pan-European STOXX 600 and Germany's trade-sensitive DAX .GDAXI were down 0.9 and 1.4 percent respectively, with technology and carmakers taking the biggest hits.

“Investors are cashing in on yesterday’s gains, as trade tensions remain alive and well,” wrote David Madden, an analyst for CMC Markets, adding a lasting recovery for stocks was unlikely without tangible progress on trade negotiations.

Tech stocks .SX8P were the worst performers, falling 2.6 percent as concerns over tariffs spread to a sector thus far considered relatively resilient to trade disruptions.

Chipmakers STMicro (STM.MI), Infineon (IFXGn.DE) and ASML (ASML.AS) were among the biggest decliners, falling 5.1 percent, 4.2 percent and 2.9 percent respectively.

Asian tech stocks had sold off overnight after threats from U.S. President Donald Trump to curb Chinese investment in U.S. tech firms.

The auto sector index fell 2.4 percent as a profit warning from lighting firm Osram renewed anxiety over auto tariffs and their impact.

Osram plunged over 20 percent after it said restrictions on trade and sales affecting auto manufacturers had created “noticeable uncertainty”.

“The trade tariff pain is clearly starting to come to the fore in companies connected to autos,” one trader wrote.

A rare bright spot was high dividend-paying consumer staples stocks, including Nestle (NESN.S) and Unilever (ULVR.L), which gained as they are considered safer in times of market stress.

Reporting by Helen Reid, Editing by John Stonestreet and Mark Potter

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