European Markets Wobble amid Tariff Tensions: A Trade War Looms

European shares fell as U.S. President Trump's tariff threats over Greenland stoked fears of a trade war. The STOXX 600 saw its biggest decline in two months, while corporate earnings and Davos developments also influenced market sentiment. Rising sales boosted Renault, while TotalEnergies faced a mixed outlook.

On Tuesday, European shares took a hit as growing concerns over U.S. President Donald Trump's threat to impose tariffs regarding Greenland unsettled investors for a second day.

The STOXX 600 slid 0.7% by 0803 GMT, following its sharpest decline in two months the previous day. Trump's proposal to levy escalating tariffs on eight European nations unless the U.S. is permitted to acquire Greenland has fueled apprehensions of a potential trade conflict, leaving investors jittery.

Market sentiment this week is also expected to be influenced by corporate earnings and policy announcements from the World Economic Forum in Davos. Performance varied among companies: Renault Group saw a 1.6% rise in shares due to increased sales, while TotalEnergies was stable amidst anticipated lower oil and gas sales alongside better refining margins. However, shares in luxury firms like LVMH and Pernod Ricard fell after Trump threatened significant tariffs on French wine and champagne, urging France to support his Board of Peace initiative.