MILAN (Reuters) - European shares fell slightly on Friday after U.S. President Donald Trump warned of further tariffs on China, although losses were limited by gains among defensive stocks like utilities.
The pan European STOXX 600 (STOXX) fell 0.45 percent by 0707 GMT, erasing only part of the 2.4 percent gain in the previous session and remained on track for a small weekly gain.
Trump on Thursday directed U.S. trade officials to identify tariffs on $100 billion more Chinese imports, upping the ante in an already high-stakes trade confrontation between the world's two largest economies.
The new warning however did not appear to change the prevailing view among investors that a full blown trade war that could threaten global growth is unlikely.
"Markets will now watch both the rhetoric from Trump’s cabinet members and China’s response to assess whether risk of a trade war is materially higher," said Credit Suisse (SIX:CSGN) in its investment daily. "We continue to see a trade war as unlikely".
However caution dominated, prompting investors into stocks like utilities seen as more resilient to possible trade escalations. French utility Suez (PA:SEVI) led the sector higher, further boosted by a bullish broker note.
Elsewhere among top movers was Dufry (S:DUFN), up 3.5 percent after the Swiss retail company proposed a higher than expected dividend, while Telecom Italia (MI:TLIT) rose 2.2 percent after Italian state lender CDP said it would buy a stake of up to 5 percent in the telecoms company.
Tech stocks were a weak spot with chip makers like Infineon (DE:IFXGn) generally lower following losses overnight in shares in Samsung Electronics (KS:005930).
The South Korean tech giant tipped a surprise record first-quarter profit but market reaction was muted due to growing concerns that the semiconductor boom that has driven its earnings is about to end.
The trade-exposed auto sector was the leading sectoral loser.