UPDATE 2-European shares retreat on trade tensions

  • Reuters
  • Stock Market News
UPDATE 2-European shares retreat on trade tensions
Credit: © Reuters.

* STOXX 600 down 0.8 pct; Germany's DAX underperforms

* profit warning hammers Nexans , hits rival Prysmian

* Norwegian Air surges on dealmaking hopes

* Aerospace supplier Cobham boosted by broker upgrade (Adds closing prices, quotes)

By Danilo Masoni and Julien Ponthus

MILAN/LONDON, June 18 (Reuters) - European shares fell for a second day on Monday as worries over a trade war between the United States and China continued to keep investors on the edge, while cable maker Nexans NEXS.PA plummeted after a profit warning.

The STOXX 600 .STOXX index fell 0.8 percent following losses in Asia and a weak open on Wall Street after U.S. President Donald Trump cranked up trade tensions by going ahead with tariffs on Chinese imports, prompting Beijing to immediately respond in kind. MKTS/GLOB

"Investors continue to react to Friday's ramping of unwelcome US-China trade tensions," said Accendo Markets analysts Mike van Dulken and Artjom Hatsaturjants.

The pan-European benchmark erased all the gains it made on Thursday when the ECB said interest rates would stay at record lows at least through the summer of 2019.

Germany's DAX .GDAXI declined 0.8 percent, underperforming the broader European market amid worries that a crisis over migration policy could destabilise Angela Merkel's three-month-old coalition government. to the pressure, Trump, who regularly complains about Germany's trade surplus and car exports, directly criticised Merkel's government. "The people of Germany are turning against their leadership as migration is rocking the already tenuous Berlin coalition," he wrote on Twitter. maker Volkswagen VOWG_p.DE suffered the most, down 3.3 percent, followed by sportswear maker Adidas ADSGn.DE , which lost 2.7 percent.

"With the chancellor desperate to maintain a coalition to maintain her dominance over German politics, markets are understandably jittery at the thought of any political upheaval in the biggest economy in Europe," commented IG market analyst Joshua Mahony.

France's Nexans fell 16 percent after the company warned that an "abrupt deterioration" of its high-voltage activities was likely to translate into lower profits for the full year. warning also weighed on Italian rival Prysmian PRY.MI , which fell 1.6 percent.

French gas and power group Engie ENGIE.PA fell 4.8 percent after saying unscheduled outages at its Belgian nuclear reactors will have an impact of 250 million euros on its 2018 core and net profit. supplier Cobham COB.L soared 4.6 percent after an upgrade to overweight from Morgan Stanley (NYSE: MS ).

"We think current management have stabilised performance, with necessary costs sunk and measures taken to aid operational delivery," analysts at the U.S. bank said.

Norwegian Air Shuttle NWC.OL rose 10.1 percent after Lufthansa LHAG.DE said it was in contact with the Norwegian carrier over a possible combination. is also the subject of bid interest from British Airways owner IAG ICAG.L . IAG gained 0.7 percent and Lufthansa shares declined 0.6 percent.

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