European markets closed lower Monday, following news China will impose tariffs on some U.S. imports from June 1.
The pan-European STOXX 600 closed provisionally down 1.2%. Autos and basic resources stocks — which are particular sensitive to trade news — were the worst performers.
On Friday, trade talks between U.S. and Chinese negotiators broke up without a deal, shortly after America hiked its tariff rate to 25% on $200 billion worth of Chinese goods.
In an interview with Fox News on Sunday, White House Economic Advisor Larry Kudlow said President Donald Trump and Chinese President Xi Jinping are likely to meet at the upcoming June G-20 summit in Japan. Kudlow said the chances of such a meeting "were pretty good," but he said there are "no concrete, definite plans" for when U.S. and Chinese negotiators will meet again.
However, news of China's retaliation Monday compounded losses in major European markets. Beijing will increase the tariffs to 25% from 10% on June 1, the Chinese Finance Ministry said.
On Wall Street, the Dow Jones Industrial Average index sank as much as 600 points on the back of trade jitters. Boeing shares declined more than 3% amid speculation the airplane maker could be singled out by China in the trade war.
Back in Europe, E.On and Centrica were the two notable companies reporting earnings on Monday. The former reported that first-quarter adjusted earnings before interest and tax (EBIT) had declined 8% to 1.67 billion euros ($1.88 billion), beating the 1.64 billion average forecast in a Reuters poll. Shares traded slightly above the flatline.
Meanwhile, Britain's largest energy supplier Centrica said it faces a challenging trading environment for the first half of the year due to a national cap on energy prices, warmer weather and weak U.K. gas prices. Gross revenue rose 54% in the first four months of 2019, and the company maintained its full-year guidance. Centrica shares were up 3%.
Perched at the bottom of the Stoxx 600 was Danish medical device maker Ambu, which continued a punishing period since it announced that CEO Lars Marcher would step down on May 15. Shares were down a further 10% Monday.
German industrial giant Thyssenkrupp fell by more than 8% after the collapse of a $13 billion merger with Tata Steel amid pressure from the European Union.