By Julien Ponthus
LONDON (Reuters) - Losses on European exchanges steepened on Wednesday after China unveiled new tariffs against U.S. products, increasing concerns of an escalating trade standoff between the two countries.
The pan-regional STOXX 600 index and Germany's exporter-heavy DAX hit a session low, down 1 percent and 1.4 percent respectively after China said it would impose additional tariffs of 25 percent on 106 U.S. goods.
U.S. stocks futures also fell sharply. Nasdaq futures were down 2.1 percent, S&P 500 futures fell 1.6 percent and Dow Jones futures tumbled down 1.8 percent.
The tension could also be felt on the Chinese yuan, which suffered its biggest daily fall versus the dollar in two weeks and through lower yields for top-rated U.S. and European government bonds.
"China has taken out big guns to answer Trump’s tariff, the trade war is here", Naeem Aslam, chief market analyst at Think Markets, said.
The European tech sector posted the worst performance with a fall of 1.6 percent, while cyclical stocks such as financials and industrials also weighed heavily.
WPP (LON:WPP) was among the biggest fallers at the open after the British advertising group said it was conducting an investigation into an allegation of personal misconduct against its chief executive, Martin Sorrell, who denied any wrongdoing.
The shares gradually recouped some of their losses and were down 1.5 percent at 0856 GMT.
Swiss Re was down 3.1 percent after the reinsurer said Japan's SoftBank was in talks to buy a stake which is unlikely to exceed 10 percent.
Bloomberg reported on March 29 that SoftBank was looking to buy a 25 percent stake in Swiss Re, worth about $9.6 billion, as part of its drive to broaden its investments, which include its $93 billion Vision Fund for technology projects.
German IT-leasing specialist Grenke was the best performing stock, up about 5.9 percent after a positive trading update for the first quarter.