LONDON – European shares followed their Asian peers upwards after U.S. President Donald Trump imposed 10 percent tariffs on an additional $200 billion worth of Chinese imports and warned of duties on more products if China took retaliatory action.
After opening flat, the pan-European STOXX 600 was up 0.1 percent at 0837 GMT, weighed down by a 0.1 percent dip in the FTSE 100.
Trading centers in the euro zone such as Germany’s DAX posted strong rises. Home to large exporters and carmakers which are seen likely to suffer badly from an all out global trade war, Frankfurt was up 0.5 percent.
Other bourses in Europe such as Paris were also in positive territory, with the CAC 40 .FCHO up 0.6 percent.
Thomas Costerg, senior U.S. economist at Pictet, said ahead of the U.S. trade announcement investors might well be prepared for it and take the view that the Trump administration had shown some restraint as it could have imposed even higher tariffs.
“Ten percent could actually come as a relief”, he said, adding that such a figure would be “bad but manageable”.
Neil Wilson, chief market analyst at Markets.com said on Tuesday the fine print of the new tariffs could also be seen as providing some relief.
“Exemptions have turned this into something of a sell the rumour, buy the fact type scenario for investors”, he said.
Mergers and acquisitions prompted steep moves across European bourses.
The top gainer was Norway’s Schibsted ASA, up 11.1 percent after it said it would spin off its international online classifieds.
Denmark’s Pandora (PNDORA.CO) jumped 9 percent in large volumes. A trader cited a report that private equity funds were considering a possible offer for the company as a reason for the share price rise.
Swiss chemical group Clariant (CLN.S) was up 6.5 percent after it announced it would merge its high-performance materials business with that of new anchor shareholder Saudi Basic Industries Corporation (SABIC) (2010.SE), to focus on higher-value speciality chemicals.
Zalando (ZALG.DE) Europe’s biggest pure online fashion retailer, was the worst performer, down 14 percent after blaming a long, hot summer for cutting its 2018 outlook.
Its main shareholder, Kinnevik (KINVb.ST), which holds about 31 pct stake in Zalando, fell 7 percent.