Europe midday: Tariff threat hits Stoxx; French CPI below 1%

(Sharecast News) - Tariff tremors hit European markets on Friday as US President Donald Trump again threatened levies on the European Union and said those he planned for Canada and Mexico would start next week.

The pan-European Stoxx 600 index was down around 0.29% at 555.46. Trump on Thursday said a 25% tariff on the EU would apply to "cars and all other things", while also confirming the Mexico and Canada would be hit by the same amount on March 4.

China will face an extra 10% tariff rate from the same date. Trump is still claiming that his moves are linked to drug trafficking and illegal immigration, but Beijing said it would "take all necessary countermeasures to defend its legitimate rights and interests" should the U.S. impose further import tariffs on its goods.

Asian markets were sharply lower on the news.

"The only certainty in this saga is uncertainty, so keep a close eye on developments between now and 4 March. Next on the agenda is reciprocal tariffs pencilled in for 2 April with other major US trading partners. The EU, in particular, will be in focus," said Hargreaves Lansdown analyst Derren Nathan.

In economic news, France's inflation rate dropped to below 1% in February for the first time in four years, with expectations rising that the European Central Bank will lower interest rates again next week as price pressures ease.

The annual increase in France's consumer price index (CPI) more than halved from January, slowing from 1.7% to just 0.8% this month, according to the National Institute of Statistics and Economic Studies (otherwise known as INSEE).

In another heavy day of corporate earnings, shares in airline group IAG jumped after annual results beat forecasts, while Rolls-Royce made further gains after bumper results on Thursday.

Teleperformance shares slumped after annual results late on Thursday, while French auto parts supplier Valeo was down 12% on the tariff threat.

Reporting by Frank Prenesti for Sharecast.com