European stocks lower as Trump widens trade war; U.K. economy contracted in May

Investing.com - European stocks fell Friday after U.S. President Donald Trump announced fresh tariffs on Canada, raising concerns that the European Union may be the next to incur his displeasure. 

At 04:05 ET (08:05 GMT), the DAX index in Germany dropped 0.8%, the CAC 40 in France slipped 0.6% and the FTSE 100 in the U.K. fell 0.2%. 

Trump widens trade war

Trump late Thursday announced a 35% tariff rate on all imports from Canada from August 1 and planned to impose blanket tariffs of 15% or 20% on most other trading partners.

This raised concerns that the European Union could receive a letter on tariff rates shortly, throwing into question the progress of trade talks between Washington and the bloc.

EU trade chief Maros Sefcovic said recently good progress had been made on a framework trade agreement, but a deal has yet to be signed and Trump’s patience could be tested.

British economy contracted in May

On the economic data front, consumer price inflation in France rose to 0.9% in June, revised up from a preliminary reading of 0.8% and slightly above analysts’ expectations.

This followed German inflation easing to 2.0% in June, suggesting the European Central Bank has plenty of room to cut monetary policy further, probably in September, to boost the region’s economy.

In June, the ECB slashed borrowing costs for the eighth time in a year, bringing its key deposit rate down by 25 basis points to 2.0%.

The Bank of England may also soon have to cut rates as well, after Britain’s economy contracted unexpectedly for a second month running in May.

Data released earlier Friday by the Office for National Statistics showed that U.K. gross domestic product fell by 0.1% in May on a monthly basis, following a contraction of 0.3% in April, which was the biggest decline since October 2023. 

BP’s upstream output to impress 

In the corporate sector, BP (NYSE:BP) stock rose after the energy giant said its second-quarter results are expected to be impacted by lower prices received for gas and oil, but its upstream output is set to be higher than previously forecast.

Swedish hotel property owner Pandox (ST:PANDXb) posted a 2% year-on-year increase in group revenues in the second quarter, supported by recent acquisitions.

UniCredit (BIT:CRDI) has no plans to heed the advice of the German government to drop its ambitions to take over Commerzbank (ETR:CBKG), the Italian bank’s CEO Andrea Orcel was quoted as saying on Friday.

"On Commerzbank we’ll press ahead despite the German government’s stance. We were invited in September to buy a 4.5% stake, it’s not clear why we should go away now," Orcel is reported as telling a board meeting the da before.

UniCredit this week doubled its equity and voting stake in Commerzbank by turning derivatives into shares.

Oil prices edge higher

Oil prices rose Friday on growing expectations of additional sanctions on Russia, although gains have been capped by tariff worries and increased OPEC+ production. 

At 04:05 ET, Brent futures climbed 0.2% to $68.80 a barrel, and U.S. West Texas Intermediate crude futures rose 0.3% to $66.79 a barrel.

Both contracts lost more than 2% on Thursday as investors worried about the impact of Trump’s evolving tariff policy on global economic growth and oil demand.

However, sentiment has received a boost after Trump expressed frustration with Russian President Vladimir Putin due to the lack of progress on peace with Ukraine, raising the potential for further sanctions on the major oil producer.