German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, October 8, 2025. REUTERS/staff

By Amir Orusov and Pranav Kashyap

(Reuters) -European shares tanked on Friday, erasing weekly gains in a last-minute slide as renewed trade war fears sparked by fresh threats from U.S. President Donald Trump rattled investors' nerves, with their focus also on France.

The benchmark STOXX 600 closed 1.2% lower in its worst intraday drop in over a month.

Trump threatened a "massive increase" in tariffs on imports from China. All major regional bourses except Britain's and Spain's fell over 1%.

"The president's comments are not, obviously, helpful for the market," said Steve Sosnick, chief market analyst at Interactive Brokers.

"We finally got through the worst of the tariff concerns, and now we find ourselves once again faced with another round of them, and the tone of his comments was certainly quite aggressive."

AUTO STOCKS LEAD WAY DOWN

Europe's auto stocks skidded into the weekend, with the sector down over 9% for the week, making it the worst performer. Steep losses in Ferrari and BMW weighed heavily. Utilities, often seen as bond proxies, emerged as the week's top gainer.

Investors also focused on France, where President Emmanuel Macron scrambled to name a new prime minister before a self-imposed deadline, amid warnings from the central bank that political gridlock is beginning to bite into growth.

French blue chips dropped 2% this week as markets were rocked on Monday after Sebastien Lecornu, France's fifth prime minister in two years, tendered his and his government's resignation just hours after announcing the cabinet line-up.

Earlier in the week, the STOXX 600 had scaled record highs, buoyed by hopes of looser U.S. monetary policy and relentless AI-driven optimism. But those gains unraveled as political jitters in France and Japan, coupled with a U.S. government shutdown, sent investors to safe havens.

On the day, almost all sectors fell across the board, with technology and luxury stocks at the forefront of the selloff.

Energy stocks were also knocked lower. Oil prices declined to multi-month lows as the market's risk premium faded after Israel and Hamas agreed to the first phase of a plan to end the war in Gaza. [O/R]

Real estate climbed 0.2%, snapping a four-day losing streak, while food & beverages rose 0.3%, extending gains to a fourth straight session.

Basic resources fell 2.5%, with ArcelorMittal down 5.8% after Goldman Sachs downgraded its rating on the steelmaker to "neutral" from "buy."

Among other movers, Germany's Energiekontor dropped 19.4% after the wind and solar park developer cut its 2025 earnings forecast.

Jyske Bank gained 3.6% after the Danish lender hiked its full-year guidance.

(Reporting by Shashwat Chauhan, Pranav Kashyap and Johann M Cherian in Bengaluru and Amir Orusov in Gdansk; Editing by Mrigank Dhaniwala, Tasim Zahid, Rod Nickel)