By Nikhil Sharma
(Reuters) -European shares rose on Friday but were on track for their biggest weekly fall in three months, as escalating global trade tensions fanned fears of an economic slowdown.
The pan-continental STOXX 600 was up 0.4% as of 0950 GMT, and down about 2% for the week so far.
The benchmark index had ended lower on Thursday after U.S. President Donald Trump threatened to slap a 200% tariff on wine and other alcohol from the European Union in response to the bloc’s levies on U.S. whiskey.
Trump’s flip-flops on tariffs have roiled global markets, rattling investors and consumers.
He upped his tariff onslaught this week as soon as major U.S. trading partners retaliated against the trade barriers erected by Washington.
“The ongoing uncertainty about tariffs… is raising questions about the outlook for growth and that’s having a particular impact on risky assets generally,” said Richard Flax, chief investment officer at Moneyfarm.
The aerospace & defence sector led the gains with a 1.8% jump on Friday. The sub-index was up 2% for the week, extending its rally on prospects of higher military spending by Europe.
Some investors remained optimistic despite the trade war gloom, particularly because of the progress around the ceasefire in Ukraine and Germany’s plans to approve a 500 billion euro fund to revive growth and ramp up military spending.
Russian President Vladimir Putin on Thursday confirmed his support for ceasefire proposal, but first, a number of crucial conditions need to be worked out or clarified.
Technology and basic resources gained 1.3% and 1.1% on Friday, respectively.
Media index, on the other hand, fell 0.7%, dragged down by a 7.6% drop in Universal Music Group (UMG) after Bill Ackman’s Pershing Square cut its stake in the company.
STOXX 600’s retail index was the biggest loser for the week, falling 5.7% so far.
BMW fell 1.8% after the carmaker’s net profit slumped by over a third in 2024 to 7.68 billion euros ($8.32 billion).
Kering slumped 11% after its Italian luxury brand Gucci appointed Georgian designer Demna as its artistic director.
On the economic front, German inflation unexpectedly fell in February, building a case for further policy easing by the European Central Bank.
Investors also closely monitored Portugal after President Marcelo Rebelo de Sousa on Thursday called to hold an early parliamentary election, two days after the centre-right minority government lost a parliamentary confidence vote.
(Reporting by Nikhil Sharma; Editing by Sonia Cheema and Shinjini Ganguli)
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