European shares flat, steelmakers drop after Trump’s tariff on metals

European shares were trading flat on Tuesday after closing at a record high in the previous session, as investors assessed the risks of an escalating trade war after U.S. President Donald Trump raised tariffs on metals.

The pan-European STOXX 600 index was down 0.07% as of 0933 GMT, while Germany's benchmark touched a fresh intraday record high and was up 0.1%.

Trump on Monday raised the tariff rate on aluminium to 25% from 10% "without exceptions or exemptions" and is set to announce reciprocal tariffs on all countries that impose duties on U.S. goods this week.

Basic resources fell 2%. European steelmakers, which account for about 15% of U.S. imports, fell. Shares of ArcelorMittal and Voestalpine dropped more than 1% each, while Thyssenkrupp fell 2.7%.

Investors remained largely unfazed by the latest U.S. tariffs, believing it to be negotiation tactics by Trump. The president had last week agreed to a 30-day pause before implementing 25% tariffs on Mexico and Canada.

"The market is realising that it is more rhetoric than a literal meaning, so it's a very emotional way of negotiating," said Giles Coghlan, chief market analyst at GCFX.

"So, investors don't want to start moving in anticipation of something that might very well be reversed."

Travel and leisure slid 2.3%, dragged by a 9.7% drop in Entain after the British bookmaker said CEO Gavin Isaacs will step down immediately.

In contrast, Vaar Energi rose 5% after the oil and gas exploration and production company raised its dividend and posted fourth-quarter operating profit in line with expectations. The stock lifted energy index by 0.6%.

Kering rose 1.1% after the French luxury group reported fourth-quarter revenue above expectations. The STOXX Europe Luxury 10 index was up 0.6%.

Among other stocks, Swiss testing and certification company SGS jumped 4.6% after it reported annual sales in line with forecasts and slightly better-than-expected profit.

EssilorLuxottica rose 1.1% after Jefferies upgraded the Franco-Italian eyewear maker to "buy" from "hold", saying its earnings was on the cusp of accelerating.

Kemira fell 8.5% after the Finnish chemical solutions maker missed fourth-quarter profit forecasts due to weaker margins and higher-than-expected one-off costs.

Investors will keenly listen to Federal Reserve Chair Jerome Powell's semiannual monetary policy testimony at 1500 GMT, in anticipation of his comments on Trump's trade policies and their implications on the U.S. interest rate outlook.

(Reporting by Nikhil Sharma; Editing by Mrigank Dhaniwala and Arun Koyyur)