European Markets Slide Amid Trump's Greenland Tariff Threats

European markets fell to a two-week low as U.S. President Donald Trump's threats to impose tariffs unless allowed to buy Greenland spooked investors. The STOXX 600 index slumped 0.7%, while Germany's DAX and France's CAC 40 also saw declines. Market reactions are mixed pending further developments.

European shares hit a two-week low on Tuesday as U.S. President Donald Trump's insistence on buying Greenland and imposing tariffs unsettled investors. The pan-European STOXX 600 recorded a 0.7% drop, marking its steepest two-day decline in two months. France's CAC 40 and Germany's DAX indices also faltered.

Trump has threatened increasing tariffs on eight European nations from February 1 unless Greenland is sold to the U.S., raising fears of a new trade war. While skepticism persists regarding Trump's follow-through, investor anxiety is palpable as he continues with firm rhetoric.

Analysts led by Jim Reid from Deutsche Bank noted, "Markets have reacted, but bigger moves could occur if rhetoric intensifies. Trump's participation at Davos tomorrow might reveal his full geopolitical stance." Top global policymakers attending the World Economic Forum in Davos, Switzerland are under keen observation for economic policy signals.

Meanwhile, European markets are also being influenced by corporate earnings. Renault Group shares climbed 2.2% post higher sales projections, Britain's Wise soared 16% on strong Q3 results, while Qiagen rose 12.4% amid strategic operation considerations.

Despite gains in the corporate sector, sectors on the STOXX 600 saw broad declines, with real estate down 1.9% due to rising euro zone bond yields. Luxury group LVMH dropped 2.2% amid Trump's 200% tariff threat on French wines, urging France's President to engage in his Board of Peace initiative.

Citigroup downgraded its outlook for continental Europe to "neutral," citing escalating transatlantic tensions and tariff uncertainties that cloud short-term investment prospects for European equities.

(With inputs from agencies.)