European stocks closed lower on trade spat, but log a back-to-back weekly rise Europe Markets

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Siemens, one of the loser in Europe Friday

European stocks finished lower on Friday, but registered a second straight weekly gain, after U.S. President Donald Trump threatened China with additional tariffs.

The White House announcement unsettled markets, ratcheting up the possibility of a prolonged trade conflict, after a week of tit-for-tat moves by Washington and Beijing.

How markets are moving

The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP -1.37% slipped 0.4% to 374.82, erasing a small part of a 2.4% rise logged on Thursday, when the index rallied to its best one-day percentage gain since June 19, 2016 on an easing in trade-war worries. For the week, the pan-Europe gauge rose 1.1%, marking its second weekly rise in a row.

But stocks pared some losses. In Frankfurt, the DAX 30 /zigman2/quotes/210597999/delayed DX:DAX -1.16% fell 0.5% to 12,241.27 after soaring 2.9% on Thursday for its best single-session gain since April 24. In Paris, the CAC 40 index /zigman2/quotes/210597958/delayed FR:PX1 -1.82% slipped 0.4% to 5,258.24, after its best one-day rise in almost a year. For the week, the index rose 1.8%.

The FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX -1.80% slipped 0.1% to 7,190.57.

The euro /zigman2/quotes/210561242/realtime/sampled EURUSD +0.0085% traded at $1.2261, slightly above $1.2242 seen late Thursday in New York.

What’s driving markets

Trump said the U.S. is exploring the possibility of imposing tariffs on another $100 billion worth of Chinese goods. The move could escalate a fragile situation between the two countries that has seen tit-for-tat tariff announcements against the other in recent days.

In recent sessions, global equity markets have had a bumpy ride as traders shifted from pessimism to optimism and back again over the prospect of a trade war between the world’s two biggest economies.

European markets were being dragged lower Friday alongside Wall Street stocks.

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Three Ways Washington Is Weighing Down the Markets

Fears about a trade war with China, the prospect of new tech rules and Trump's attacks on Amazon are dragging on the markets, outweighing optimism about tax cuts and deregulation. WSJ's Gerald F. Seib explains.

Also in focus for investors are the U.S. monthly jobs data, a reflection of the health of the country’s economy. Many European companies count the U.S. as a key market.

What strategists are saying

“It all looks more like a classic Trump negotiation—float an extreme position, to step back from the worst-case scenario in return for some big concessions. Both sides would prefer to negotiate a settlement,” said Neil Wilson, senior market analyst at ETX Capital.

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