Luxury stocks hammered as Chinese trade fears hit Europe

(Reuters) – European shares fell on Friday as a deterioration in U.S.-China ties compounded fears of a slower recovery from the economic damage wreaked by the COVID-19 pandemic.

Beijing on Thursday planned to impose a new security law in Hong Kong, drawing a warning from U.S. President Donald Trump that Washington would react “very strongly”.

The pan-European STOXX 600 <.stoxx> was down 1.6% by 0716 GMT, with Asia-exposed stocks such as HSBC Holdings Plc tumbling 5.5% and Prudential Plc falling 8.4%.

UK’s FTSE 100 <.ftse> lagged its European peers with a 2% drop.

Luxury goods makers including LVMH and Kering SA , who draw a major part of their revenue from China, fell more than 2%.

Shares in France’s Renault SA slid 4.3% after Finance Minister Bruno Le Maire said he had not signed off on a 5 billion euros ($5.47 billion) state-guaranteed loan to help the company cope with the pandemic fallout.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta)