Europe ends on a muted note amid trade jitters; Dechra Pharmaceuticals tanks 21.4%

Key Points
  • The pan-European STOXX 600 provisionally closed up 0.07 percent, with sectors pointing in opposite directions by the end of trade.
  • Europe's auto stocks were the worst performers amid renewed trade tensions, closing down 1 percent.
  • President Donald Trump said last week he was prepared to impose new tariffs on China as soon as a public comment period ends on Thursday.

European stocks ended the first trading session of a brand-new month on a relatively mixed note, amid heightened concerns of an escalating trade war between the world's two largest economies.

The pan-European STOXX 600 provisionally closed up 0.07 percent, with sectors pointing in opposite directions by the end of trade.

Despite a negative session in Asia, markets in Europe were mixed by Monday's close. The U.K.'s FTSE 100 jumped 0.97 percent, while France's CAC 40 ended just a touch higher, up 0.13 percent, and Germany's DAX sank 0.14 percent. Peripheral bourses were relatively mixed. Markets are closed stateside as Americans celebrate Labor Day.

Europe's automakers were the worst performers, finishing down 1 percent as trade tensions continued to bubble away. Last week, the European Union said it would respond in kind if President Donald Trump reneged on his pledge not to impose car tariffs. Faurecia, Porsche and Volkswagen all ended down over 1.5 percent.

Looking at individual stocks, SBM Offshore was the European benchmark's top gainer, jumping 10.7 percent, after the Dutch company announced a final settlement to resolve alleged improper sales practices.

Another top performer was Britain's Royal Mail, which popped 3 percent, after it announced that one of its subsidiaries had acquired Dicom Canada, a parcel delivery firm based in Canada, from Wind Point Partners for $360 million Canadian dollars (US$275 million).

Meanwhile, Britain's Dechra Pharmaceuticals slumped to the bottom of the index amid earnings news, down 21.4 percent. The company, which produces pharmaceutical products for animals, said that while the new fiscal year had started well, it had implemented contingency plans for a hard Brexit.

Trade tensions

Even as Wall Street takes a breather on Monday, international focus remains largely attuned to global trade developments, after Trump said last week that he was prepared to impose new tariffs on China as soon as a public comment period ends on Thursday. If implemented by the White House, it would be another major escalation given Washington has already applied charges on $50 billion of exports from Beijing.

Meanwhile, market participants remain wary of unstable emerging market currencies after sharp sell-offs in Argentina's peso and Turkey's lira last month. Turkey's central bank said it would adjust its monetary policy stance after inflation jumped to its highest level since late 2003 on Monday. In a rare move, the bank said it would soon step in given "significant risks" to price stability.

Argentina's government said Monday that it planned to modify the taxes charged on exports of some commodities. President Mauricio Macri is under pressure to increase public revenue, especially after unexpectedly saying he would ask the International Monetary Fund for the early release of funds from a $50 billion financing deal.

Elsewhere, traders remained on edge after trade talks between the U.S. and Canada ended Friday without a deal. Market players were initially hopeful after Washington struck a deal with Mexico. But separate discussions with Canada soured after the Toronto Star published off-the-record comments by Trump to Bloomberg reporters, in which the president said he would not make any compromises.