STOXX 600 snaps 10-week winning streak as US tariff uncertainty weighs

By Nikhil Sharma and Purvi Agarwal

March 7 (Reuters) - European shares closed Friday lower, as investors grappled with whipsaw changes in U.S. trade policy throughout the week and digested a slightly softer than expected U.S. jobs report earlier in the day.

The pan-European STOXX 600 .STOXX was down 0.7% for the week, and snapped a 10-session winning streak, its longest since early 2024.

U.S. President Donald Trump on Thursday suspended the 25% tariffs he had imposed this week on most goods from Canada and Mexico, in the latest twist to his trade policy that has led markets to increasingly look at tariffs as a negotiating tactic.

Trump had imposed the trade duties on the two countries on Tuesday and soon followed it with an exemption on automakers that complied with the existing free trade agreements.

"Because of the chop and change of U.S. trade policy, there is a lot of uncertainty in the air. We still don't know what kind of tariffs Europe may be hit with," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

However, China could not escape and now has a 20% duty on its exports to the U.S. Data on the day also showed a surprise shrinking in Chinese imports.

Luxury stocks, exposed to Chinese consumers, fell, with Burberry BRBY.L down 6.8%, Kering PRTP.PA falling 3.9% and LVMH LNMH.PA off 2.8%. The region-wide European luxury index .STXLUXP sank about 2.7%.

Industrial goods and services .SXNP, that house defence stocks, led declines with a 1.8% loss. Miners .SXPP followed with a 1.6% decline as copper prices eased.

On the other hand, telecommunications .SXKP led gains with a 2.1% rise.

Meanwhile, a softer-than-expected U.S. jobs reading helped some sentiment recover, despite a pickup in job growth in February.

"We are now seeing three rate cuts still pencilled in ...there may be a little bit of a delay, but there's likely to be a bit of an acceleration towards the end of the year," Streeter said.

Germany's plans to create a 500 billion euro ($543 billion) infrastructure fund and overhaul borrowing rules led to expectations of higher bond supply, putting German long-dated bonds at the helm of a global debt sell-off, but they showed signs of a recovery on Friday.

German mid-cap .MDAXI and small-cap .SDAXI indexes outperformed peers this week on hopes of greater fiscal spending.

The European Central Bank's 25 basis-point interest rate cut also remained in the spotlight, with the central bank warned of "phenomenal uncertainty" and raising prospects of a pause in its policy easing next month.

Grid operator Elia Group ELI.BR jumped 17% to top the STOXX 600 and logged its best day on record, after surpassing market expectations for full-year results.

($1 = 0.9213 euros)