- European shares face steepest weekly loss in three years
- German industrial orders stagnate, hinting at slow recovery
- Gerresheimer drops after KKR exits takeover talks
April 4 (Reuters) - European shares dipped on Friday, heading for their steepest weekly loss in three years, as investors grappled with prospects of a global recession after U.S. President Donald Trump announced sweeping tariffs on trading partners.
The pan-European STOXX index fell 1.8% at 0815 GMT, taking its losses for the week to 5%, the sharpest weekly decline since February 2022.
Europe was hit with a 20% effective U.S. tariff rate this week, prompting traders to increase bets on interest rate cuts from the European Central Bank to shore up economic growth.
Traders now see a quarter-point rate cut from the ECB later this month, alongside two more reductions widely expected before 2025 ends.
"The EU will likely retaliate. The process will be slow-moving... while the net impact on inflation is highly uncertain, the risks may be skewed to the downside in the euro area," Deutsche Bank economists said, estimating that the increase in U.S. tariffs could knock 0.4 to 0.7 percentage points off of euro area GDP and 0.3 to 0.6 off UK GDP.
France, working along with the European Union, is likely to issue reciprocal responses to U.S. tariff measures on the EU initially in mid-April and then again in late April, France's government spokesperson said on Thursday.
European banks, sensitive to economic outlook, racked up the most losses among sectors, shedding 11% in two sessions, the steepest losses since March 2020.
Data on Friday showed German industrial orders stagnated in February and the January data were upwardly revised, showing that Germany's industrial sector could have bottomed out but the recovery may be slow.
Bets on a fiscal stimulus boost from Germany drove the STOXX 600 to record highs in the beginning of the year. However, fears of U.S. tariffs and its fallout sapped risk appetite, knocking the index off 9.1% from its peak a month ago.
"From later this year and in 2026, as fiscal stimulus starts to get traction and ECB cuts work their magic, the positives are going to outweigh the negatives," TS Lombard analyst Davide Oneglia said.
Among stocks, Gerresheimer slumped 13% after a report said KKR has abandoned a private equity consortium discussing a takeover of the German speciality packaging maker.
Kinnevik climbed 7.7% after the nomination committee proposed that Cristina Stenbeck return as the chair of the Swedish investment company after nine years.
Investors await a crucial March U.S. jobs report, due at 1230 GMT, to gauge the health of the world's biggest economy.
Reporting by Medha Singh and Sukriti Gupta in Bengaluru; Editing by Mrigank Dhaniwala
Source: Reuters