European Shares Stumble Amid Trade War Fears

European shares dropped significantly following U.S. President Donald Trump's announcement of a 25% tariff on cars and other EU goods. The STOXX 600 index fell 0.7%, with carmakers like Stellantis, Volkswagen, and Porsche experiencing losses. Notably, Ferrari's stocks fell 6% after Exor divested a 4% stake.

European shares took a sharp downturn on Thursday as U.S. President Donald Trump unveiled plans for a 25% tariff on European cars and other goods. This move prompted fears of a burgeoning trade war, with the European Union pledging a strong and immediate counter response.

The pan-European STOXX 600 index saw a 0.7% decrease as of 0813 GMT, marking a retreat from the record highs seen in the previous session. Automotive stocks were particularly affected, plummeting over 3%, with industry giants Stellantis, Volkswagen, and Porsche all reversing by 2%.

In other market movements, Ferrari's shares fell over 6% following Exor's sale of a 4% stake, totaling 3 billion euros. Conversely, Rolls-Royce shares soared by 16%, buoyed by an uplift in business prospects and favorable profit forecasts for 2024, attributed to increased demand for widebody jets and effective cost-saving strategies.