European shares plummet to 16-month low on trade war gloom

The European Central Bank has estimated that a blanket US tariff would lower euro zone growth by 0.3 percentage points in the first year. EU counter-tariffs on the US would raise the damage to half a percentage point

Traders are now pricing ECB deposit rate at 1.65% in December from 1.75% on Friday and 1.9% last week before Trump's tariff announcement. File picture: iStock

European shares plunged to a 16-month low on Monday as investors grappled with the possibility of a recession after US president Donald Trump showed no signs of letting up in his aggressive trade war.

The pan-European STOXX 600 slumped 5.8% at 0722 GMT, down for the fourth straight session and on track for its steepest one-day percentage decline since the Covid-19 pandemic.