* European shares open sharply lower
* Autos, miners lead sectoral fallers; banks down
* Trump vows rapid increase in tariffs on Mexico
* China factory activity drops more than expected
* STOXX 600 set for first negative month of 2019
May 31 - Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Danilo Masoni. Reach him on Messenger to share your thoughts on market moves: danilo.masoni.thomsonreuters.com@reuters.net
STUCK IN REVERSE GEAR (0908 GMT)
Car stocks in Europe are tumbling 2.9% to their lowest since Jan 8 after Trump's threat to slap tariffs on Mexico. With autos the main import to the U.S. from Mexico, it's no surprise they're taking a beating.
If a 25% tariff is imposed on Mexican goods, Volkswagen will be the worst hit among European carmakers, according to Credit Suisse (SIX:CSGN) which sees a potential 10% negative impact on the German carmaker's operating profit.
Export flows from Mexico to the U.S. for the main carmakers are of 7.2 billion euros ($8 billion) for Volkswagen, 2 billion euros for BMW BMWG.DE and 800 million euros for Daimler DAIGn.DE , analysts at the Swiss bank say.
The slump in the Mexican peso after Trump's tweet could be a small relief, partially offsetting the negative impacts from trade tariffs, they add.
Europe's autos and suppliers index .SXAP has fallen 17% from mid-April highs, hit by tariffs and trade war escalation.
(Thyagaraju Adinarayan)
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MEXICO TARIFFS WOULD JEOPARDISE USMCA DEAL (0820 GMT)
Trump's vow to slap a 5% tariff on all goods entering the U.S. from Mexico, effective June 10, is shaking markets this morning with the Mexican peso falling 2.7% against the dollar and Mexico-exposed stocks tumbling.
Besides the immediate market impact, Goldman Sachs (NYSE:GS) analysts reckon tariffs could have a knock-on effect in slowing the ratification of a U.S.-Mexico-Canada trade deal (the USMCA), making it less likely to happen before the 2020 election.
"We expect that Mexico will slow its ratification process if tariffs are in place," they write, adding that Democratic leaders would be likely to slow the process too.
The Mexico tariff threat in numbers:
* The U.S. imported $352 billion in goods from Mexico in 2018, and exported $265 billion
* Largest import categories are cars and parts ($93 billion), computers ($27 billion), routers ($10 billion), and other electronics ($17 billion)
* With tariffs on Mexico and tariffs on List 4 imports from China, a significant majority of U.S. imports on some products would be subject to additional tariffs, such as computers (79%), TVs (84%), personal electronics (79%), likely hurting U.S. consumers
(Helen Reid)
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EUROPE AT FEBRUARY LOWS, MEXICO STANDOFF HITS AUTOS, BANKS (0737 GMT)
European shares are off to a sharply lower start as the worst month of the year for stocks draws to an end with investors fretting again over slowing global growth following Trump's tariff move against Mexico and disappointing data from China.
"Trump is going all out here. The move to start a trade war on another front has shaken sentiment in an already fragile market," says Jasper Lawler, Head of Research at LCG.
No surprise that autos .SXAP and miners .SXPP are leading sectoral fallers, while banks .SX7P are also heavily under pressure, as the economic outlook darkens. No sector is trading in the black.
Among stocks with direct exposure to Mexico are carmakers Volkswagen VOWG.DE and Fiat Chrysler FCHA.MI , banks BBVA BBVA.MC , Santander SAN.MC and steel firms ArcelorMittal MT.AS and Italy's Tenaris TENR.MI . Their shares are falling 1.7-5.2% in early trading.
Here's your opening snapshot:
(Danilo Masoni)
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ON OUR RADAR: AUTOS, BANKS, MEXICO-EXPOSED STOCKS (0659 GMT)
Worries over global growth following Trump's tariff move against Mexico and disappointing factory data from China are set to push European shares down sharply at the open today with futures in the export oriented German DAX index down more than 1%.
Sectors most exposed to the international economy such as autos and banks will likely suffer the most with shares in companies with direct business in Mexico such as Germany's Volkswagen VOWG_p.DE and Spanish bank BBVA BBVA.MC falling 2-3% in premarket trade. BBVA derived 37% of its pretax profit from Mexico in 2018.
Fiat Chrysler FCHA.MI , which is in merger talks with Renault , also produces cars in Mexico. Banks HSBC HSBA.L , Santander SAN.MC and Sabadell SABE.MC also have a presence there, as well as ArcelorMittal MT.AS , which produces some steel in Mexico to import into the US, and Italian pipes maker Tenaris TENR.MI .
Elsewhere, a Reuters report that Amazon (NASDAQ:AMZN) is interested in buying a prepaid cellphone service from T-Mobile and Sprint could lift shares in T-Mobile parent Deutsche Telekom DTEGn.DE . A disappointing update from Wizz Air WIZZ.L has sent its shares down 2% in pre-market trade, while in broker moves, traders say a BAML upgrade could lift shares in chipmaker and Amazon supplier STMicro STM.BN . BAML downgraded Dialog Semi DLGS.DE , traders add.
Monsanto (NYSE:MON) woes continue for Bayer with Los Angeles County suing Monsanto to force it to help pay for reducing PCB contamination in dozens of bodies of water. Bayer BAYGn.DE shares seen down 1-2%. For more headlines check out the previous post.
(Danilo Masoni)
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EUROPE FUTURES OPEN DOWN SHARPLY: DAX -1% (0614 GMT)
Fresh worries over a slowdown in global economic growth following Trump's tariff move against Mexico and the disappointing Chinese data is set to push European shares sharply lower at the open today. Futures in the trade-sensitive German DAX index .GDAXI are falling more than 1%, while futures in other country benchmarks are also down sharply.
On the corporate front, merger talks between Fiat Chrysler FCHA.MI and Renault RENA.PA continue to be in focus, while still in M&A, sources said Deutsche Telekom's DTEGn.DE U.S. wireless carrier T-Mobile US Also interesting is news that Germany will extend for another year a bonus scheme to encourage people to buy electric cars. Meanwhile Monsanto woes continue for Bayer BAYGn.DE with Los Angeles County suing Monsanto to force it help pay for reducing PCB contamination in dozens of bodies of water. Here's your futures snapshot and below your early morning headlines roundup. Nissan's technology could pay in Renault-FCA deal -sources says valuation for Renault merger non-negotiable - Les Echos Sprint considering divesting wireless spectrum -sources extends 1.2 bln euro electric car bonus to 2020 Angeles County sues Bayer's Monsanto over PCB contamination units investigated in Brazil over alleged irregularities to approve law to make it easier to revoke motorway concessions banks Alpha, Eurobank report fall in quarterly profit moving some manufacturing out of China amid trade conflict firm Aluflexpack to Zurich launch IPO next week & General to sell general insurance unit to Allianz (DE:ALVG) Masoni) ***** EUROPE SEEN LOWER AFTER AS TRUMP TARIFFS TARGET MEXICO (0532 GMT) European shares are expected to open lower this morning on renewed trade tension after U.S. President Donald Trump said the Washington would impose a new tariff on all imports from Mexico next month until illegal immigration is stopped. from China showing that factory activity in May slumped into a deeper contraction than markets had expected is also set to weigh today. spreadbetters expect London's FTSE to open 26 points lower at 7,192, Germany's DAX to fall 81 points to 11,821, and France's CAC to fall 29 points to 5,220, a trader says. Over in Asia, U.S. stock futures slid and sovereign bonds surged on Friday as investors feared Trump's shock move to slap tariffs on Mexico risked tipping the United States into recession. Month-end bargain hunting helped MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rise 0.3%. pan-European STOXX 600 .STOXX index edged up 0.4% in the previous session but is firmly on track to suffer its first negative month of 2019, having fallen nearly 5 percent so far this month with heightened trade tensions fuelling worries over slowing economic growth. (Danilo Masoni) ***** <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ STOXX https://tmsnrt.rs/2WxK1Pa Europe futures https://tmsnrt.rs/2WBpNnv open https://tmsnrt.rs/2WylYQ2 mexico https://tmsnrt.rs/2KeqaxL ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>