European shares subdued as investors gauge trade developments

By Sukriti Gupta and Sanchayaita Roy

July 1 (Reuters) - European shares edged lower in choppy trading on Tuesday, after clocking monthly losses for June in the previous session, as investors weighed the uncertainty over U.S. trade deals.

The pan-European STOXX 600 index .STOXX lost 0.2% to 540.45 points, as of 0819 GMT. The other regional indexes also traded lower.

Concerns about U.S. tariffs and their impact on global growth have resurfaced to the centre of market sentiment as the July 9 deadline for countries to reach deals with the U.S. is fast approaching.

On Monday, U.S. President Donald Trump expressed frustration with U.S.-Japan trade negotiations as Treasury Secretary Scott Bessent warned that countries could be notified of sharply higher tariffs despite good-faith negotiations.

"We have the weight of the trade uncertainties weighing on the European stocks today," said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.

Meanwhile, the European Union is open to a deal that would apply a universal 10% tariff on many of its exports, but the bloc is seeking U.S. commitments to reduce tariffs in some key sectors such as pharmaceuticals, alcohol, semiconductors, and commercial aircraft, Bloomberg News reported on Monday.

"The news suggests that EU might accept the Trump administration's universal's 10% tariffs, but the questions regarding key sectors loom," said Ozkardeskaya, adding that if these sectors are not exempt, the impact on European companies could be significant.
EU's trade chief will hold negotiations in Washington this week to avert higher tariffs.

European utilities stocks .SX6P led sectoral gains, rising 0.8%. Media shares .SXMP fell 1.4%.

Zealand Pharma ZELA.CO gained 4.1% and was among the top gainers in the STOXX 600, after Exane BNP Paribas initiates coverage on the stock with an "Outperform" rating.

On the other hand, InPost INPST.AS was the biggest decliner in the index, down 4.8%, after a company controlled by Advent International offered about 3.5% stake in the parcel locker firm to institutional investors.

On Tuesday, European Central Bank President Christine Lagarde will join a panel with several other central bank chiefs, including the U.S. Federal Reserve chair Jerome Powell, at the ECB forum in Sintra, Portugal.

Lagarde said on Monday that uncertainty was bound to remain a key feature of the global economy.

In the U.S., investors await a vote over Trump's sweeping tax-cut and spending bill.

Meanwhile, euro-zone manufacturing activity showed further signs of recovery in June, as new orders stopped falling for the first time in more than three years.