By Danilo Masoni
MILAN (Reuters) - European shares fell for a second day on Monday as worries over a trade war between the United States and China continued to keep investors on the edge, while cable maker Nexans (PA:NEXS) plummeted after a profit warning.
The STOXX 600 (STOXX) index fell 0.6 percent following losses in Asia after U.S. President Donald Trump cranked up trade tensions by going ahead with tariffs on Chinese imports, prompting Beijing to immediately respond in kind.
"Investors continue to react to Friday's ramping of unwelcome US-China trade tensions," said Accendo Markets analysts Mike van Dulken and Artjom Hatsaturjants.
The pan-European benchmark was on track to erase all the gains it made on Thursday when the ECB said interest rates would stay at record lows at least through the summer of 2019.
Germany's DAX (GDAXI) declined 0.8 percent, underperforming the broader European market and weighed down by worries that a crisis over migration policy could destabilize Angela Merkel's three-month-old coalition government.
Weighing the most on the German index were software maker SAP (DE:SAPG), industrial group Siemens (DE:SIEGn) and sportswear maker Adidas (DE:ADSGn) , all down between 1 and 1.9 percent.
France's Nexans fell 18.2 percent after the company warned that an "abrupt deterioration" of its high-voltage activities was likely to translate into lower profits for the full year.
The warning also weighed on Italian rival Prysmian (MI:PRY), which fell 2.2 percent.
French gas and power group Engie (PA:ENGIE) fell 2.2 percent after saying unscheduled outages at its Belgian nuclear reactors will have an impact of 250 million euros on its 2018 core and net profit.
Elsewhere, deal-making activity drove stock moves.
Norwegian Air Shuttle (OL:NWC) rose 8.5 percent after Lufthansa (DE:LHAG) said it was in contact with the Norwegian carrier over a possible combination.
Norwegian is also the subject of bid interest from British Airways owner IAG (L:ICAG). IAG gained 1.1 percent and Lufthansa shares declined 0.1 percent.
Mid-sized bank Virgin Money (L:VM) rose as much as 2.5 percent after CYBG (L:CYBGC) agreed a 1.7 billion-pound, all-share deal to acquire its rival and create Britain's sixth-largest bank. While CYBG rose 0.1 percent, shares in Virgin Money pared gains to trade little changed.
Aerospace supplier Cobham (L:COB) soared 5.5 percent after an upgrade to overweight from Morgan Stanley (NYSE:MS).
"We think current management have stabilized performance, with necessary costs sunk and measures taken to aid operational delivery," analysts at the US bank said.