European shares eke out gains as trade fueled rally fades

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The German share price index, DAX board, is seen at the stock exchange in Frankfurt, Germany, March 21, 2018. REUTERS/Tilman Blasshofer

(Reuters) – European shares edged higher in early trading on Tuesday, following a rally from the previous session, but Washington’s tariff threats on $4 billion of additional EU goods kept gains in check.

Days after reaching a truce in the U.S.-China trade war, the U.S. government on Monday ratcheted up pressure on Europe in a long-running dispute over aircraft subsidies.

Planemaker Airbus (PA:AIR) dropped 1% and pressured France’s CAC 40 index (FCHI), which underperformed the pan-European STOXX 600 index’s (STOXX) 0.2% gain by 0715 GMT.

The U.S. Trade Representative’s office released a list of additional products – including olives, Italian cheese and Scotch whiskey – that could be hit with tariffs, on top of products worth $21 billion that were announced in April.

Financials (SXFP) rose 0.4% and was the biggest boost to markets, as shares of HSBC Holdings (L:HSBA) rose 0.4% and Prudential Plc (L:PRU) climbed 1%.