European stock markets paused for breath Thursday as investor attention moved beyond a trade deal signed by China and the United States to corporate earnings and the global economic outlook.
Shares in European carmakers hit the brakes as Germany's defence minister confirmed that the US threatened to impose a 25-percent tariff on European auto exports if continental heavyweights continued to back a nuclear deal with Iran.
Major European stock markets were lower overall, "with the US-China signing ceremony a day earlier failing to provide much excitement or spark another rally", noted Craig Erlam, senior market analyst at traders OANDA Europe.
The dollar dropped against the pound but rose versus the euro and yen, while oil prices firmed.
After painstaking on-off talks between economic superpowers China and the US, President Donald Trump put pen to paper Wednesday on an agreement that lowers tensions between the two and provides a boost to the global outlook.
Equities have been rallying since last month's announcement of a deal to ease a long-running stand-off that has jolted growth prospects around the world.
"There's relief at the situation progressing in a positive way that removes some uncertainty but disappointment at the same time that tariffs remain in place and will for the foreseeable future," Erlam said.
"Thankfully, (the current) earnings season will provide a handy distraction."
The trade pact -- the first part of a wider agreement -- includes pledges from Beijing to boost purchases of US agricultural goods and other exports for two years, protects US technology, and provides enforcement mechanisms allowing Washington to impose penalties that Beijing cannot respond to.
In return, the US has cut tariffs on some Chinese products and cancelled others that had been lined up, though levies remain in place on goods worth hundreds of billions of dollars, which Trump said will stay in place until the next phase of talks is complete.
The Dow and S&P 500 hit records on Wall Street Wednesday and pushed further into positive territory in early trading on Thursday.
- US tariffs threat -
On the corporate front, shares in European carmakers dropped after Germany's defence minister on Thursday confirmed a report on the US tariffs threat.
"This expression or threat, as you will, does exist," Annegret Kramp-Karrenbauer told a news conference in London following a report in the Washington Post newspaper.
The US daily said Trump made the threat if Britain, France and Germany did not formally accuse Tehran of flouting the 2015 nuclear deal.
In afternoon European trading, share prices of Renault, BMW and Volkswagen showed losses of between 1.4 and 0.8 percent.
- Key figures at 1445 GMT -
London - FTSE 100: DOWN 0.6 percent at 7,601.11 points
Frankfurt - DAX 30: DOWN 0.2 percent at 13,407.70
Paris - CAC 40: FLAT at 6,031.22
EURO STOXX 50: FLAT at 3,767.87
Tokyo - Nikkei 225: UP 0.1 percent at 23,933.13 (close)
Hong Kong - Hang Seng: UP 0.4 percent at 28,883.04 (close)
Shanghai - Composite: DOWN 0.5 at 3,074.08 (close)
New York - Dow: UP 0.5 percent at 29,169.81
Euro/dollar: DOWN at $1.1149 from $1.1150 at 2200 GMT
Pound/dollar: UP at $1.3047 from $1.3038
Euro/pound: DOWN at 85.44 pence from 85.52 pence
Dollar/yen: UP at 110.05 yen from 109.90 yen
Brent Crude: UP 0.8 percent at $64.50 per barrel
West Texas Intermediate: UP 0.7 percent at $58.19 per barrel