European stocks fall amid US tariff threat; Novartis spinoff Alcon surges 40%

The pan-European Euro Stoxx 600 index closed provisionally 0.35% lower, with most sectors and bourses in negative territory. It comes after U.S. Trade Representative Robert Lighthizer on Monday proposed a list of European Union products on which to slap tariffs as retaliation for European aircraft subsidies, with Airbus down nearly 2%.

The U.S. is considering tariffs on about $11 billion of EU products ranging from aircraft parts to wine. The move comes as the President Donald Trump administration looks to retaliate against EU subsidies for Airbus, which the World Trade Organization ruled had “adverse effects” on America.

Other European-listed stocks such as Rolls-Royce, Thales, Dassault Systemes and Leonardo were seen as among the most exposed to Lighthizer’s threat. Shares of each firm traded lower.

Drink maker stocks also went on a wild ride with Remy Cointreau, Pernod Ricard and Davide Campari all suffering losses. Other items on the U.S. list included some European-produced cheese, passenger helicopters, as well as certain types of motorcycles and ski suits.

The announcement comes shortly after a World Trade Organization ruling said the U.S. was guilty of illegal subsidies in production of Boeing aircraft.

Market focus is also attuned to corporate results, with major U.S. banks set to get the ball rolling later in the week. J.P. Morgan Chase & Co and Wells Fargo are both poised to report their latest figures on Friday.

Concerns about U.S. earnings have dragged on global equities in recent sessions, though a robust jobs report last week helped to soothe frayed nerves.

Breaking from the overall negative sentiment, Alcon, which was spun off from drug maker Novartis Tuesday, surged 40 percent following its debut on the SIX Swiss Exchange. Novartis, on the other hand, dropped 2 percent.

Brexit drama

Back in Europe, investors continue to monitor an upcoming Brexit summit. U.K. Prime Minister Theresa May is expected to meet with the leaders of Germany and France later in the session, with four days to go before the world’s fifth-largest economy is due to leave the European Union.

May will be at an emergency summit on Wednesday, when all 28 EU states will vote on whether to grant the U.K. an additional Brexit extension.

Elsewhere, Commerzbank is reportedly set to decide whether or not to continue merger talks with Deutsche Bank on Tuesday.