Europe close: Stocks slip after fresh US tariff threat

European shares slipped into the red on Wednesday after closing at a record high in the previous session as traders assessed disagreement between the US and Europe over how to end the war in Ukraine, a spike in UK inflation and more tariff threats from President Donald Trump.

The pan-regional Stoxx 600 index was down 0.91% at 552.10, alongside a 1.8% drop on the German Dax to 22,433.63, while the Ibex 35 gave back 1.63% to end the day out from 12,929.40.

Eyes were on the spat following the meeting between US and Russian officials in Saudi Arabia on Tuesday to discuss a way to settle the war – at the exclusion of Ukraine itself and Europe.

US Secretary of State Marco Rubio and his Russia counterpart Sergei Lavrov agreed to create a working group to take “peace” talks forward and also look at deepening economic and diplomatic ties between their nations. Meanwhile, European nations are scrambling to formulate a unified response to support Ukraine’s claim for a return of all territory seized during the conflict that started in 2022.

Sentiment was also hit as Trump presented plans to impose 25% levies on automobile, semiconductor, and pharmaceutical imports.

In economic news, inflation in the UK rose to 3% in January, above expectations of 2.8%. Core inflation, excluding energy, food, alcohol and tobacco prices, hit 3.7%, up from 3.2% in the previous month and the highest rate since April 2024.

In another heavy day of corporate news, shares in Philips fell more than 11% after annual results.

Rheinmetall continued its run as the German arms maker benefited from talk of higher defence spending amid the Ukraine crisis.

Glencore was 7% lower after the miner and commodities trader posted a fall in annual profits but still pledged to return $2bn to shareholders including a $1bn share buyback.

French cable systems maker Nexans surged after annual profits beat forecasts.