European stocks traded significantly lower Tuesday as investors worry that the U.S. and China are getting closer to a trade war.
The pan-European Stoxx 600 was 1.1 percent lower with every sector trading in the red. The German bourse was the worst major market, down by 1.7 percent. Basic resources were the worst-performers down by 2.3 percent due to the trade concerns.
These resurfaced after President Trump warned of potential fresh tariffs on China. Trump said Monday he could add another 10 percent tariff on $200 billion worth of Chinese goods. The move came after Beijing earlier on Monday said it impose duties on $50 billion of U.S. goods, which it claimed was in response to new U.S. levies announced Friday.
As a result, the dollar traded 0.8 percent lower against the yen early Tuesday morning.
Looking across the European benchmark, there were few stocks in the black. Inmarsat was up by 2.4 percent, after reports that Echostar is considering increasing its bid after the former rejected a previous offer. Capita shares were also higher after announcing that it has been selected for a defense fire and rescue project.
In commodity markets, oil prices fell about 1 percent ahead of a key meeting of OPEC and non-OPEC producers later this week. There are expectations that OPEC countries and allies like Russia will gradually increase their output.
In terms of data, the calendar is thin with only euro area construction output numbers due at 10 a.m. London time.
Meanwhile, markets will watch out for comments from central bankers, meeting in Sintra, Portugal, this week. Tuesday's speakers include European Central Bank (ECB) President Mario Draghi, Federal Reserve Bank of St Louis President James Bullard and ECB Executive Board Member Peter Praet.
