By Carla Mozee, MarketWatch
Investors yanked European stocks into the red Thursday, with a selloff in German and Spanish stocks leading the broader market lower on the final day of trading in May.
In Germany, Deutsche Bank AG shares skidded and auto makers came under pressure as the U.S. imposed tariffs on European steel and aluminum.
In Spain, Prime Minister Mariano Rajoy faced the possibility of being forced out of office.
How markets performed
Germany’s DAX 30 index /zigman2/quotes/210597999/delayed DX:DAX -0.45% tumbled 1.4% to end at 12,604.89, led by a selloff in shares of Deutsche Bank. The index closed at its lowest since late April, FactSet data showed. Spain’s IBEX 35 /zigman2/quotes/210597995/delayed XX:IBEX -0.37% sank 1.3% to end at a two-month low at 9,465.50.
Losses in those market helped drag down the Stoxx Europe 600 Index /zigman2/quotes/210599654/delayed XX:SXXP -0.50% 0.6%, ending at 383.06. The pan-European benchmark ended the month of May down 0.6%, a far cry from April’s jump of 3.9%.
Italy’s FTSE MIB index /zigman2/quotes/210598024/delayed IT:I945 -0.62% ended with a mild loss of 0.1% on Thursday at 21,784.18. In the fixed-income market, the country’s 2-year bond yield /zigman2/quotes/211347219/realtime BX:TMBMKIT-02Y +5.88% fell 80 basis points to 0.96%, according to Tradeweb. Yields fall as bond prices rise. At one point this week, the yield had climbed more than a percentage point.
France’s CAC 40 index /zigman2/quotes/210597958/delayed FR:PX1 -0.94% flipped lower and closed down 0.5% at 5,398.40, and in London, the FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -0.22% fell 0.2% to finish at 7,678.20.
The euro /zigman2/quotes/210561242/realtime/sampled EURUSD -0.0862% had risen above $1.17 intraday but eventually fell back to $1.1659. That wasn’t far from $1.1666 late Wednesday in New York.
What drove markets
A trade dispute between the U.S. and Europe and political strife in Spain slammed into European financial markets at an already vulnerable time for equity and bond investors who have been dealing with political instability in Italy.
Shares of auto makers extended losses after U.S. President Donald Trump made good on his threat, made in March, to slap tariffs on European steel and aluminum, starting Friday. Trump has claimed the tariffs will protect U.S. steelmakers. Read: Moody’s upwardly revises outlook for U.S. steel industry
Last-minute efforts by the EU were seen as failing to offer the concessions the U.S. wanted for it to hold off imposing a 25% tariff on EU steel imports and a levy of 10% on aluminum.
Jean-Claude Juncker, president of the European Commission, wrote in a tweet that it will defend Europe’s interests.
The European bloc has threatened to impose $3.5 billion of its own levies on U.S. agriculture, steel and industrial products and in turn, Trump threatened to hit European cars with a U.S. import tax. A report published Thursday in German magazine Wirtschaftswoche said Trump told French President Emmanuel Macron he wants to block luxury cars from Germany from the U.S. market.