FALCON POWERS – European stocks declined on Wednesday, affected by a wave of selling in automotive stocks after news of potential Chinese tariffs on imported cars, as well as stronger-than-expected UK inflation data that weighed on investor sentiment.
The European automotive stocks index fell 1.9% to its lowest level in more than three months, with shares of Mercedes-Benz, BMW, and Volkswagen dropping between 1.1% and 2.3%. A Chinese government-affiliated automotive research institute expert told the Global Times newspaper that China should raise tariffs on large gasoline-powered cars to 25%, as China faces a sharp increase in U.S. tariffs on car imports and the possibility of the European Union also imposing tariffs.
The European Commission began an investigation in October into whether fully electric vehicles made in China are receiving subsidies that distort pricing, which could justify the need to impose tariffs. The EU may impose provisional tariffs in July.
The pan-European STOXX 600 index fell 0.3%, and the UK’s FTSE 100 led losses in the region after data showed UK inflation slowed less than expected to 2.3% in April, prompting traders to scale back bets on the Bank of England cutting rates next month.
Shares of Marks & Spencer jumped around 9% after the British retailer reported a 58% jump in annual profit, as its strategy to overhaul its business led to strong sales growth in both food and clothing divisions.
