European shares slip as trade uncertainty, AI-disruption fears weigh

By Johann M Cherian

Feb 24 (Reuters) - European shares slipped on Tuesday as investors avoided large bets against an uncertain trade backdrop, while banks tanked, tracking a Wall Street selloff after artificial intelligence-disruption concerns resurfaced.

The pan-European STOXX 600 index .STOXX was down 0.1% at 627.15 points by 0915 GMT.

A resurgence in trade uncertainty dominated global markets as U.S. President Donald Trump's new blanket tariff rate took effect, according to a Customs notice, after his earlier tariffs were deemed unconstitutional.

The development fuelled ambiguities about trade deals struck last year following which the European Parliament decided to postpone for a second time a vote on the trade agreement signed with the U.S.

"The EU concern is that a stacking nature of the 15% Section 122 tariffs would bring total tariff rates for some products above the 15% maximum agreed by the EU and the U.S.," strategists led by Deutsche Bank's Jim Reid said in a note.

"Net-net we still think the effective tariff rate will fall this year and that the world post-SCOTUS will see lower tariffs than the pre-SCOTUS world."

Meanwhile, banks .SX7E, .SX7P tumbled more than 1.6% each, leading sectors lower as they tracked a Wall Street selloff from Monday, with renewed concerns that newer AI models could disrupt traditional businesses.

Analysts also pointed to a bearish analysis from Citrini Research on the possible risks to the global economy and the broader financial sector.

Investors instead flocked to havens such as utilities .SX6P, which gained 1.6%, while a few better-than-expected corporate reports also provided some relief.

Earnings expectations for the fourth-quarter have improved to a 0.6% drop from around 4% earlier this month. However, the outlook is likely to be further clouded by recent trade uncertainty.

Forvia climbed 6% after the car parts supplier forecast higher operating margin of between 6% and 6.5% in 2026. The broader auto sector .SXAP gained 1.6%.

French vouchers and benefit cards provider Edenred added 7.7% after reporting 2025 core earnings above market expectations, citing rising sales and initial benefits from its cost-cutting and efficiency plan.

Spanish telecoms giant Telefonica > gained nearly 1% on expectations of core profit growth between 1.5% and 2.5% in 2026, as it works to further reduce leverage under its new strategy.

Engine maker MTU Aero Engines lost 5.6% after forecasting 2026 results broadly in line with analyst expectations, as it navigates the fallout from partner Pratt & Whitney's warning on defective engine components last year.