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European Markets Close Lower As Trade Worries Rise

European markets ended lower on Wednesday, giving up some of their recent gains, amid an escalation in U.S.-China trade tensions.

The pan European Stoxx 600 ended down 0.3%. Among the major markets in Europe, France ended notably lower with its benchmark CAC 40 declining 0.62%. The U.K.'s FTSE 100 and Germany's DAX ended lower by 0.42% and 0.33%, respectively.

Among other markets in Europe, Austria, Belgium, Czech Republic, Greece, Iceland, Italy, Netherlands, Norway, Poland, Portugal, Spain and Turkey all ended weak. Switzerland ended modestly higher, while Sweden closed flat.

In addition to worries about trade disputes, markets were also reacting to news that the European Union is closer to taking disciplinary action over Italy's growing debt.

Bank stocks were mostly lower in today's trades.

In the UK market, Shares of British American Tobacco declined 4.4% after the company said that it expects global industry volumes to decline 3.5%.

Provident Financial dropped 6.6%. BP, CRH, Standard Chartered, Centrica, Capita and Burberry Group also declined sharply.

On the other hand, Reckitt Benckiser, Ferguson, Fresnillo, Travis Parkins, Unilever, Diageo, Severn Trent, Sage and AstraZeneca closed with strong gains.

In Germany, Axis Springer rose sharply after the company announced a public takeover offer from Global investment firm Kohlberg Kravis Roberts at an offer price of 63 euros per share in cash.

Fresenius, HeidelbergCement, Adidas, Wirecard and BASF ended sharply lower.

French stocks Technip, ArcelorMittal, Total, Societe Generale, STMicroElectronics, Accor, Peugeot, Renault, Credit Agricole and Bouygues ended sharply lower.

In economic news, data from the Statistical Office INE showed Spain's Consumer price inflation slowed to 0.8% in May from 1.5% in April. This was the lowest since January 2018, when prices gained 0.6%. The rate also matched the preliminary estimate published on May 30.

Core inflation that excludes food and energy came in at 0.7% versus 0.9% in April.

On a monthly basis, overall consumer price inflation slowed to 0.2%, as estimated, from 1% in April.

A report from Insee showed France's payroll employment increased in the first quarter driven by private sector, rising 0.4% to 93,800, after a 0.3% rise in the fourth quarter.

Payroll employment in the public sector rose only 1,000, while it increased steadily by 92,800 in the private sector.

Employment in industry grew by 7,500 and by 16,100 in construction, which was the strongest increase since the end of 2007. In market services, employment advanced 68,200.

U.S. President Donald Trump's remarks on Tuesday suggested he has "no interest" in negotiating unless China agrees to come back to the table to discuss previous terms of a deal that he considered nearly complete.

Trump said he expects to meet with Chinese President Xi Jinping at the G20 summit and has warned that he will impose new tariffs on Chinese goods if his counterpart does not attend.

China vowed a tough response if the U.S. goes ahead with its plans of additional tariffs on Chinese goods.

The President of the European Central Bank, Mario Draghi, has warned about the global trade dispute, saying Central European economies may be more vulnerable to a global trade war given their high reliance on foreign trade and particular focus on single industries, such as car manufacturing.

"The central and eastern European business model has become vulnerable to shocks to international trade and financial conditions," Mr Draghi is quoted as saying in an ECB conference.

In Brexit news, the main opposition Labour party announced plans to introduce parliamentary legislation to block UK exiting the European Union without a deal in place.

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