Europe midday: Stocks stuck in a rut amid trade war worries

Stocks are continuing to trade sharply lower and are near their session lows following US president Donald Trump's pledge to place tariffs on imports of steel and aluminum, with a sharp gain for the Japanese yen adding to the volatile mix.

As of 1230 GMT, the benchmark Stoxx 600 was down by 1.49% or 5.59 points to 369.27, alongside a fall of 2.18% or 265.61 points to 11,924.30 and a retreat of 1.74% or 391.69 points to 22,056.66 for the FTSE Mibtel.

In parallel, euro/dollar was higher by 0.37% at 1.2320, with the yield on the benchmark 10-year German bund down by three basis points at 0.62% and that on similarly-dated US Tresauries flat at 2.81%.

Sector-wise, the Stoxx 600 gauge of Autombiles & Parts was getting beaten down by 2.10% to 606.49, but had come off its session lows.

Commenting on Friday's market backdrop, Mike van Dulken at Accendo Markets said: "Equities have extended this week's reversal, US President Trump to blame for reigniting trade war concerns with plans to slap punitive tariffs on steel and aluminium imports to bolster his protectionist approach.

"This just as we head into an uncertain Italian election, with anti-EU/Euro parties in the lead, and await UK PM May's latest major Brexit speech at 1.30pm."

On the proposed US tariffs specifically, analysts at Rabobank pointed how "even if only transitory, the import duties could put some upward pressure on US inflation over the coming months.

"[...] Markets are clearly concerned that Trump’s move to impose tariffs will spark retaliation from other countries or trade blocs, which could be the start of a trade war. Although we have yet to see a response from China [...]

"European Commission President Juncker, too, stated that the EU “will react firmly and commensurately to defend our interests."

Meantime, in the background, dollar/yen was trading 0.86% lower to 105.27 after Bank of Japan governor Haruhiko Kuroda spoke of the convenience of exiting the monetary authority's quantitative easing plans if consumer prices in the country hit the BoJ's inflation target.

Elsewhere on the macroeconomic front, according to Germany's Ministry of Finance retail sales volumes in the country shrank by 0.7% month-on-month in February (consensus: 0.9%).

In parallel, Eurostat reported that producer prices within the single currency bloc were ahead by 0.4% month-on-month in January, as expected.

For later in the day, investors were waiting on the release of the final reading on the University of Michigan's consumer confidence index for the month of February.

Back in the corporate patch, ratings agency Fitch waded into the debate on diesel vehicles, saying that German court rulings allowing cities to restrict the use of diesel vehicles paved the way for diesel car bans.

Further South, Societe Generale announced a deal with three of its unions to shed 2,135 jobs as it restructured its French retail banking network.