Trade War Turmoil: European Shares Plummet as Trump's Threats Rattle Markets

European shares tumbled on Friday due to renewed trade war fears driven by U.S. President Donald Trump's threats. The STOXX 600 benchmark dropped 1.2%, while auto stocks led the decline with a sector drop of over 9%. Political issues in France and Japan, along with other economic factors, compounded the market's downturn.

European markets suffered a significant blow on Friday as shares plunged following fresh trade war threats from U.S. President Donald Trump. The STOXX 600 benchmark index saw a steep decline of 1.2% in its most substantial daily drop in over a month, erasing earlier weekly gains.

Trump's aggressive rhetoric proposed a 'massive increase' in tariffs on Chinese imports, unnerving investors. Europe's regional bourses, especially in the auto sector, felt the impact sharply, with auto stocks falling over 9%, marking them as the week's worst performer. Concurrently, political instability in France exacerbated investor apprehension.

The resignation of French Prime Minister Sebastien Lecornu fueled volatility, while additional global factors, including economic conditions in Japan and a U.S. government shutdown, prompted investors to seek safer assets. The market saw varied sector performances, as real estate slightly recovered with a 0.2% gain, although energy and basic resources sectors experienced declines.

(With inputs from agencies.)