MILAN: European shares fell on Tuesday after a new threat by Washington to impose tariffs on more Chinese imports, while Thomas Cook tanked on a profit warning.
The pan-European STOXX 600 benchmark index fell 0.2 percent by 0851 GMT percent, pulling back from the one-week high reached the day before on optimism over Brexit and a possible Italian budget compromise with Brussels.
"The positivity that started the week was nowhere to be seen on Tuesday, with Donald Trump pouring more fuel on the trade war fire while unleashing some unhelpful Brexit comments," said Connor Campbell, analyst Spreadex.com.
The U.S. president said on Monday he expected to raise tariffs on $200 billion in Chinese imports to 25 percent from the current 10 percent and repeated his threat to impose tariffs on all remaining imports from China.
Among the leading sectoral fallers on Tuesday were mining companies, down 1 percent as copper prices slid for the third day, pressured by Trump comments. The export-oriented auto sector fell 0.6 percent.
Travel stocks were under pressure after Thomas Cook cut its profit forecast for the second time in two months and suspended its dividend after the hot British summer deterred holidaymakers from going abroad.
Thomas Cook shares fell 30 percent to a six-year low, putting the stock on track for its biggest one-day drop since end 2011.
Its slump dragged down shares in other travel companies. TUI fell 5.1 percent to the bottom of the STOXX 600.
"It's been a challenging year for travel operators and airlines, buffeted by the `Beast from the East' at the beginning of the year, and then by industrial action in Europe, as well as rising oil prices through the summer," said Michael Hewson, an analyst at CMC Markets.
However, Accor, rose more than 1 percent. Europe's largest hotels company stuck to its target of doubling core earnings to 1.2 billion euros by 2022.
Tele2 rallied for a second day, up 7.5 percent, following a Reuters report that the European Commission was set to approve without conditions the sale of its Dutch business to Deutsche Telekom.
Following the report, which has rekindled expectations of more dealmaking in the sector, Tele2 said it was optimistic the EU would approve the planned merger.
Among other top movers on the STOXX were UDG Healthcare , down 6.7 percent after results. Traders pointed out weak cash flow figures.
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