BRUSSELS/FRANKFURT/PARIS (dpa-AFX) - European stocks fell sharply on Wednesday after Chinese newspapers warned Beijing was ready to use its dominance of rare earths as a counter in its trade battle with Washington.
The U.S. imports about 80 percent of its rare earth elements, used in a host of electronic components, from China.
In another development, Huawei Technologies Co Ltd has filed a motion for summary judgment in its lawsuit against the U.S. government.
'The U.S. government has provided no evidence to show that Huawei is a security threat. There is no gun, no smoke. Only speculation,' the company's chief legal officer Song Liuping said in a statement.
Italy's dispute over its budget with the European Union also kept investors nervous.
The pan European Stoxx 600 was down 1.5 percent at 370.30 after declining 0.2 percent in the previous session.
The German DAX was losing 1.4 percent, France's CAC 40 index was plunging 1.8 percent and the U.K.'s FTSE 100 was down 1.4 percent.
Mining stocks fell as investors monitored trade headlines. Anglo American, Antofagasta and Glencore lost 2-3 percent.
Marks and Spencer Group slumped 4.4 percent on fears it could be removed from the FTSE 100 next week.
Stobart Group shares jumped 12.4 percent. The aviation and energy group said it was confident about the outlook for the New Year as it ramps up investment in expanding its London Southend Airport after de-risking the balance sheet through disposals.
Prosiebensat.1 shares rose nearly 4 percent after Italy's Mediaset said it had acquired a 9.6 percent stake in the German broadcaster.
In economic releases, Germany's unemployment climbed sharply in May for the first time in nearly two years, defying expectations for further decline, figures from the Federal Employment Agency showed.
The number of unemployed rose by 60,000 month-on-month, while economists had expected a decline of 7,000. The jobless rate climbed to 5 percent in May, equaling the rate seen in February.
France's consumer price inflation eased more-than-expected to 1 percent in May from 1.3 percent in April, the provision estimate from the statistical office Insee showed. A similar lower rate was last seen in September 2017.
French GDP grew 0.3 percent sequentially in the first quarter, in line with the estimate released on April 30, but slightly slower than the revised 0.4 percent expansion seen in the fourth quarter of 2018.
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