European stocks closed lower Thursday as global markets reacted to new automotive tariffs announced by U.S. President Donald Trump.

The regional Stoxx 600 index closed 0.44% lower as all major bourses declined. The Stoxx Europe autos index was down nearly 1% as most firms pared earlier losses, with Jeep maker Stellantis shedding 4.2%, Mercedes-Benz down 2.7% and Germany's BMW down 2.55%.
Trump said on Wednesday that he will impose a 25% tariff on "all cars that are not made in the United States" with the levies due to take effect on April 2. Trump White House aide Will Scharf said the new tariffs apply to "foreign-made cars and light trucks."

The White House leader later took to his Truth Social platform to threaten "far larger" tariffs on the EU and Canada should they cooperate to "do economic harm to the USA."
British retail giant Next
was the biggest winner on the Stoxx 600, adding 10.5%, after the company reported annual profit surpassing £1 billion ($1.3 billion) for the first time. Europe's retail sector was up 2%.

U.S. stocks gyrated as investors weighed the latest tariff developments. Asia-Pacific markets were mixed Thursday, but shares of Asia's automakers declined overnight on the news.

The U.K.'s long-term borrowing costs meanwhile ticked higher, with the yield on 10-year government bonds rising by 5 basis points, touching its highest level since January. The 2-year yield reversed course late in the day to trade just below the flatline.

Gilt yields had fallen on Wednesday as the government issued a fiscal update announcing the mix of spending cuts and increases largely expected by the market, and as the U.K.'s Debt Management Office announced a lower-than-expected level of annual bond issuance. The DMO trimmed the proportion of long-dated gilts in the portfolio in response to waning demand.

"You have a new [U.K.] government that's come in and tried to make changes that could correct the public finances, but growth potentially suffers on the back of that, inflation could reinflate or remain sticky based on changes to [social security payment] National Insurance, already high borrowing costs and cost of servicing debt, and the market just doesn't like it," Ken Egan, director of European sovereign credit at Kroll Bond Rating Agency, told CNBC.

"When there is a change in market sentiment you see those big moves in gilt yields. There are a lot of international investors who can switch into other asset classes."

Source: CNBC