European stocks drop ahead of Trump's tariff announcement

By Sukriti Gupta, Medha Singh and Lisa Pauline Mattackal

April 2 (Reuters) - European shares fell on Wednesday, weighed by losses in healthcare stocks, as investors awaited tariff plans from U.S. President Donald Trump that some fear could slow global growth and boost inflation.

The pan-European STOXX 600 index .STOXX closed 0.5% lower, with Germany's trade-sensitive DAX .GDAXI falling 0.7%.

Markets waited for details of Trump's reciprocal tariffs on global trading partners, which will take effect immediately after they are announced at 2000 GMT.

European indexes have been volatile this week in anticipation of the announcement after Trump dampened hopes for more targeted levies. The STOXX 600 is hovering around two-month lows and is about 5.1% below its all-time high hit in March.

"There’s no doubt (tariffs) will impact risk appetite. The real question is where the pressure points are," said Filip Carlsson, quantitative strategist at SEB.

A broad shift earlier this year into European equities was starting to fade, Carlsson added.

French industry minister Marc Ferracci said Europe would respond to tariffs in a "proportionate manner", while British finance minister Rachel Reeves said London would not rush to counter tariffs and risk undermining a possible trade deal.

European Central Bank head Christine Lagarde also warned that Trump's tariffs would be negative "the world over", though ECB policymaker Francois Villeroy de Galhau said they would not derail an ongoing decline in European inflation.

The healthcare sector .SXDP fell 1.7%, leading sector declines and dropping to its lowest level this year. Sanofi SASY.PA and Novartis NOVN.S fell about 1.6% each.

"We are going to have fresh tariffs announced later on and that's caused a lot of jitters across the market, so it's not surprising that pharma stocks have been caught up in this wave of nervousness," said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.

Novo Nordisk NOVOb.CO was the biggest drag on the benchmark index, down 2.6%.

Novo Holdings, the drugmaker's controlling shareholder, nearly doubled annual income and investment returns to a record 8 billion euros ($8.7 billion) in 2024, although its total assets under management dropped slightly.

Separate 25% tariffs on U.S. auto imports will take effect on April 3. The automobile and parts sector .SXAP edged 0.1% lower.

Meanwhile, Svitzer SVITZR.CO shares soared 30.2% after Denmark's A.P. Moller Holding made a cash offer of 9 billion Danish crowns ($1.30 billion) for the towage and marine service provider.

Shares in Grifols GRLS.MC rose 3% after Canadian fund Brookfield said it was talking with shareholders, following a report it was considering a new takeover attempt.

($1 = 6.9199 Danish crowns)