Europe midday: Stocks retreat on renewed trade tensions

(Sharecast News) - European stocks declined on Wednesday on the back of renewed trade tensions between the US and China, with markets pulling back after two days of solid gains.

By 1230 CEST, the Stoxx 600 was down 0.8% at 504.11, retreating after closing above the 500-point mark for the first time in nearly two weeks on Tuesday.

The index had gained around 4.4% over the past two trading sessions alone amid increased optimism that Washington DC and Beijing could come to some sort of trade deal, after the Trump administration exempt certain Chinese-made consumer electronics from additional tariffs.

However, tech still remains a key battleground in trade talks between the two economic powerhouses, with Wall Street-listed chip titan Nvidia being hit with $5.5bn in additional costs after the US tightened export rules to China. The company announced on Tuesday evening that its H20 chip needed a certain licence to be exported to China - a requirement which the US government said would be in place "for the indefinite future".

In economic data, the annual rate of UK inflation eased more than expected in March, to 2.6% from 2.8% in February. "A bigger than expected drop in headline inflation should be celebrated, especially considering what households have had to deal with over the past few years," said Danni Hewson, AJ Bell's head of financial analysis.

Inflation across the eurozone also slowed in March, according to figures from Eurostat, with the annual growth in consumer prices falling to 2.2% from 2.3%, in line with economists' forecasts.

Looking ahead to Thursday, the European Central Bank is expected to cut interest rates again amid ongoing tariff-related uncertainty as downside risks to growth and inflation grow.

Market movers

UK-listed Bunzl dropped more than 20% after lowering its guidance for 2025 after a worse-than-expected start to the year, with profits down "significantly" in the first quarter due to a challenging economic backdrop.

ASML, the world's leading supplier of advanced semiconductor manufacturing equipment, dropped sharply in Amsterdam after reporting weaker-than-expected orders for the first quarter, raising concerns about the impact of escalating US trade policies on the global chip industry.

London miners Antofagasta and Rio Tinto were both trading lower after issuing quarterly production updates. Antofagasta reported output improvements across all major commodity groups but warned of "significant volatility" in global markets, while Rio Tinto said that iron ore shipments would be at the lower end of guidance due extreme weather in the first quarter.

Dutch brewer Heineken was on the rise after impressing with a 0.9% increase in organic net revenues in the first quarter, slightly ahead of forecasts, despite an uncertain consumer backdrop.