European Shares Face Steep Decline Amid Tariff Tensions

European shares faced significant declines, marking the steepest weekly loss in three years due to global recession fears following U.S. tariff announcements. The pan-European STOXX index dropped 1.8% amid increased U.S. tariffs, pushing traders to anticipate ECB interest rate cuts. Adding to concerns, economic data showed stagnation in German industrial orders.

On Friday, European shares experienced a notable downturn, heading for their most severe weekly loss in three years as investors weighed the potential for a global recession. This downturn followed U.S. President Donald Trump's announcement of extensive tariffs on trading partners.

The pan-European STOXX index saw a 1.8% fall at 0815 GMT, culminating in a 5% loss for the week — the sharpest weekly decline since February 2022. With Europe facing an effective U.S. tariff rate of 20% this week, traders expressed expectations for interest rate reductions from the European Central Bank as a measure to bolster economic growth.

Economists at Deutsche Bank noted the likelihood of retaliatory measures from the EU, suggesting slow progress and an uncertain inflation impact, which could lean negatively in the euro area. New data revealed a stagnation in German industrial orders, tempering hopes for rapid recovery despite earlier boosts from anticipated fiscal stimuli.

(With inputs from agencies.)