By Purvi Agarwal
(Reuters) -European shares dropped on Thursday, in their fourth straight session of declines, as recent trade optimism stemming from potential deals with the U.S. faded, and mounting geopolitical tensions led to the markets being more cautious.
The pan-European STOXX 600 was down 0.9% at 546.66 points at 0806 GMT, eyeing its steepest one-day fall in more than two weeks.
U.S. President Donald Trump said on Wednesday that he was willing to extend the deadline for trade talks but it was not likely necessary as the U.S. will send offer letters to countries in a week or so.
The announcement comes after trade talks with China resulted in a deal to bring their truce back on track but did not offer a solution to de-escalate longstanding tensions as some tariffs still remained on board.
Treasury Secretary Scott Bessent said the European Union had previously been slower to come forward with robust proposals, but was now showing “better faith”.
However, markets were a little concerned about the EU being able to clinch a deal before Trump’s July 8 deadline – when the tariff pause expires.
“The trade optimism is waning… The European Union will be one of the last to try to deal and the July deadline might never be met,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
“The trade negotiations might end with European things being taxed so the ongoing uncertainty is weighing on sentiment.”
Geopolitical worries added more caution to markets after Trump said some U.S. personnel were being moved out of the Middle East amid rising tensions with Iran.
Travel and leisure stocks were the worst hit, down 2.4%, leading broader declines, followed by a 2.1% decline in automobile makers.
Most regional bourses were in the red with the export-heavy German DAX down 1.3%, lagging most peers.
UK’s FTSE 100 was down 0.1%. Data showed that the British economy shrank more-than-expected in April from March – the biggest monthly drop since October 2023.
Among stocks, BE Semiconductor Industries (BESI) jumped 6% after raising its long-term financial targets ahead of its investor day.
Halma gained 6.3% after the health and safety device maker’s annual adjusted pretax profit beat expectations.
The two were the biggest percentage gainers on the benchmark index.
Tesco gained 1.7% after Britain’s biggest food retailer’s domestic sales growth accelerated in its first quarter.
Intermediate Capital Group fell 3.8%, among the biggest STOXX 600 percentage decliners as the stock traded without entitlement to its latest dividend payout.
(Reporting by Purvi Agarwal in Bengaluru; Editing by Mrigank Dhaniwala and Tasim Zahid)
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