European shares sink to 16-month low

European shares tumbled on Monday to their lowest level in 16 months, as investors reacted sharply to mounting fears of a global recession following sweeping tariffs imposed by the United States last week.

The broad selloff was triggered by US President Donald Trump’s refusal to back down from the newly announced trade measures, which have already drawn retaliation from China.

The pan-European STOXX 600 index dropped 6.35 per cent by mid-morning, with Germany’s DAX falling 6.78 per cent, France’s CAC 40 down 6.01 per cent, Spain’s IBEX 35 slipping 5.95 per cent, and the UK’s FTSE 100 shedding 4.88 per cent.

The sharp declines reflect growing investor anxiety, with markets now pricing in potential interest rate cuts from both the European Central Bank and the US Federal Reserve.

Defence stocks, which had been among the best-performing sectors in Europe this year amid expectations of rising government spending on regional security, were hit especially hard.

BAE Systems PLC, Europe’s largest defence company by market value, fell 5 per cent, while German defence firms Rheinmetall AG and Hensoldt AG dropped 11.9 per cent and 11.6 per cent, respectively.

France’s Dassault Aviation SA also declined sharply, down 8.51 per cent.

Attribution: Investing.com, Amwal Al Ghad English
Subediting: M. S. Salama