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European Stocks Flail as U.S.-China Tensions Mount

European stocks slipped on Thursday amid rising concerns over the mounting economic tension between the U.S. and China. Onlookers are also expressing anxiety over the prospect of economic repercussions as well as further rate hikes.

The pan-European STOXX 600 fell by 0.8% on Thursday morning, led by losses in the construction and materials index, which slumped by 1%. Investors are now awaiting the euro zone’s retail sales print, also due on Thursday. Retail sales are expected to rise 0.2% in May compared to the previous month.

China-U.S. tensions were fueled by Beijing’s decision to impose restrictions on exports of some metals. In response, U.S. Treasury Secretary Janet Yellen is making her first trip to China in an effort to repair ties between the two superpowers.

Investor focus remains fixated on the Federal Reserve’s future actions after its June interest rate pause. According to the latest Fed minutes released on Wednesday, central bank officials largely agreed on a pause in June while acknowledging that further policy tightening is likely needed.

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