European markets close lower as trade tensions rise, VW shares slip on Audi boss arrest

The pan-European Stoxx 600 ended provisionally down by 0.79 percent on Monday with all sectors except Oil and Gas lower on average.

The FTSE 100 stock index closed barely lower for the day.

Market sentiment was being dominated by trade tensions between the U.S. and China with new tariffs on the table.

President Trump unveiled tariffs on more than 800 Chinese goods that could be worth as much as $50 billion. Beijing swiftly countered by implementing similar measures on nearly 700 different American products. China also threatened duties on U.S. crude imports.

In autos news, the boss of Volkswagen’s luxury brand Audi was arrested Monday in relation to the German carmaker’s emissions test cheating scandal. Rupert Stadler was taken into custody following concerns from a German judge that he might hinder the ongoing investigation. By the end of trade, VW shares were lower by 2.8 percent.

Looking across the European benchmark, the Italian cable-maker Prysmian finished down 2 percent, after rival firm Nexans issued a profit warning. Defense technology firm Cobham finished up by 4.59 percent after Morgan Stanley rose its outlook on the stock to overweight.

At the other end, U.K. food logistics supplier finished 7.79 percent lower. The stock, which has been on a stellar run, was downgraded by Bank of America Merrill Lynch.

In the finance sector, CYBG has agreed to buy Virgin Money for $2.26 billion, creating the U.K.’s sixth-biggest bank. According to Reuters, the deal will see Virgin Money shareholders getting 1.2125 CYBG shares per Virgin Money share they hold.

Shares in Virgin Money reversed early gains to close 2.5 percent lower.

In the Food & Drink sector, Heineken announced it would invest $58.4 million this year to update its British pubs.

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