Europe fears US-China trade war

The ECB has cut borrowing costs five times since June, and investors expect at least three more rate cuts this year to stimulate an economy struggling to recover from two years of near stagnation, Reuters reported.

Inflation rose to 2.5% last month, but the ECB expects it to return to 2% this summer, after four years above target.

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The biggest uncertainty is U.S. trade policy, which could hit Europe hard even before the bloc's direct trade barriers are implemented.

"It is a bigger threat because China has 35% of the world's manufacturing capacity," he said.

Photo: minfin.

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