European stocks closed sharply lower on Tuesday as investors monitored trade developments between the U.S and China.
The pan-European STOXX Europe 600 was 1.5% lower at the closing bell, with most sectors and major bourses seeing heavy losses.
Europe's banking stocks showed the most substantial slide, dropping 2.6% with Barclays, HSBC and Standard Chartered all down by around 3%. Italy's FinecoBank led the sector's losses, with shares down 7% after lender UniCredit said it may reduce its stake in the online banking unit.
On Wall Street, stocks fell on Tuesday after a top U.S. trade official indicated that higher tariffs on Chinese goods are coming later this week. U.S. President Donald Trump has vowed to ramp up tariffs on China, casting doubt on trade talks between the two sides. However, China's Commerce Ministry said early Tuesday that Vice Premier Liu He will still visit the United States on May 9 and May 10.
Back in Europe, shares of BMW fell by around 4% after the German carmaker reported a 78% drop in first-quarter profits, hit by legal provisions and expenses.
In corporate news, Belgian drinks maker AB InBev reported its first-quarter earnings Tuesday morning, along with Irish tax-registered pharmaceutical company Allergan. Shares of AB Inbev were more than 3% lower at the end of Tuesday's session.
On the data front, German industrial figures showed orders rose less than expected in March after two months of sharp decline, bringing little relief for Europe's largest economy.
Meanwhile, the European Commission released its latest economic forecast. The Commission still expects growth in the whole EU to hit 1.4% this year and 1.6% next year. However, it cut growth forecasts for Germany for the second time this year, as trade tensions and a Chinese slowdown weigh on the traditional economic powerhouse of the region.