Pound closes in on three-year high as concerns over US tariffs mount

 The pound headed back towards its highest level in three years against the dollar on Monday amid growing worries over the effect of Donald Trump’s trade policies.

Sterling climbed 0.7pc against the dollar to as much as $1.356.

The move extends a rally for the pound that began at the start of the year as Mr Trump came to power.

It came as Goldman Sachs warned that the US president’s plan to increase his metal tariffs from 25pc to 50pc “may be contributing” to the sales of the US currency, as well as a decline in stocks.

Meanwhile, China accused the US of breaking the terms of a trade agreement made last month. Last week, Mr Trump claimed that China had “totally violated” the deal.

China’s Commerce Ministry said on Monday that it would take forceful measures to safeguard its interests.

A White House official told CNBC that Mr Trump and Chinese leader Xi Jinping will have a call “very soon” but probably not today. Scott Bessent, the US Treasury secretary, yesterday said a one-on-one call would allow the dispute to be “ironed out”.

The dollar dropped 0.7pc to 142.9 yen, giving back some of its more than 1pc rally from last week.

The euro gained 0.6pc to $1.14. The pound was up 0.2pc against the single currency at €1.18 amid expectations the European Central Bank will cut interest rates later this week.

Meanwhile, the price of gold rose to near an all-time high.

An ounce of gold reached $3,377, an increase of 2.5pc, or 43.7pc since the start of the year.

Read the latest updates below.

06:17 PM BST

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05:37 PM BST

European shares stumble on Trump’s new tariff threat

European shares began June on a dour note as markets grappled with Donald Trump’s new tariff plans that threatened to reignite a fresh wave of global trade tensions.

The continent-wide Stoxx 600 slipped 0.1pc on Monday, after recording about a 4pc gain in May.

Late on Friday, Trump said he planned to increase tariffs on imported steel and aluminium to 50pc from 25[c, to which the European Union said it was prepared to retaliate.

Steel companies as ArcelorMittal and Aperam pared some losses and closed marginally lower.

The automobile sector, however, bore the brunt of the trade jitters, falling 2.1pc, the most among sectors.

Milan-listed Stellantis down 5pc. Mercedes-Benz, BMW and Volkswagen fell between 1.9pc and 2.7pc.

Even Luxury stocks, reliant on global exports, dropped.

“The market was definitely in what we would call risk off mode,” said Steve Sosnick, chief market analyst at Interactive Brokers.

“But each piece of rhetoric is having less of an effect than the prior ones because markets have mostly learned to shrug it off. Yet it cannot be shrugged off entirely.”

05:34 PM BST

Trump’s steel tariffs ‘won’t last three months’

Donald Trump’s latest hike to steel tariffs are a counterproductive “surprise”, a leading steel analyst has said.

Josh Spoores, of analysis firm CRU, told CNBC: “This was an absolute surprise. Already steel prices in the US are higher than anywhere else, and it is a net importer which needs to have volumes coming in. All this does is raise prices there.”

He added: “I don’t expect this to be policy in three months. Even three weeks it’s unclear.

“These tariffs are at such a high level and in the US they will affect a massive community of manufacturers which make a huge contribution to GDP and employment, so there will be lobbying on this.”

04:56 PM BST

FTSE closes flat as European markets struggle

Shares in London ended the day flat, while key European rivals lost ground.

Markets were pessimistic amid rekindled trade tensions after Donald Trump’s announcement late on Friday that he intends to double tariffs on imported steel and aluminium to 50pc, starting June 4. The move drew promises of retaliation from the European Union.

Oliver Pursche, of Wealthspire Advisors in New York, said: “(Markets are) reacting negatively because the consequences of insecurity are real, right? Investors are unsure of what comes next.

“That makes it difficult to make decisions, and while President Trump has changed his mind frequently we also know that his ego is such that he’s willing to dig his heels in.

“Things like the TACO acronym (Trump Always Chickens Out) infuriate him and the concern should be, does that mean that he is not going to pivot and back down?”

France’s Cac 40 and Germany’s Dax both lost 0.2pc. Currently, the Dow Jones is down 0.4pc, the S&P is roughly flat, and the Nasdaq is up 0.3pc.

04:36 PM BST

EU prepares ‘countermeasures’ if a tariff deal with the US crumbles

The European Union has said it is preparing “countermeasures” against the United States after the Trump administration’s surprise tariffs on steel rattled global markets and complicated the ongoing, wider tariff negotiations between Brussels and Washington.

Last week, ahead of Friday’s surprise announcement, European Commission president Ursula von der Leyen and Donald Trump agreed to “accelerate talks” on a deal.

“In the event that our negotiations do not lead to a balanced outcome, the EU is prepared to impose countermeasures, including in response to this latest tariff increase,” a Commission spokesman said.

He said the EU is finalising an expanded list of countermeasures that would take effect on July 14 or earlier.

04:08 PM BST

Wall Street struggles after Trump’s steel tariff threat

Wall Street is struggling this afternoon after Donald Trump said he plans to double tariffs on imported steel and aluminium.

The three main indexes opened in negative territory, although the Nasdaq is now roughly flat.

The S&P 500 is down 0.2pc and the Dow Jones is down 0.4pc.

Shares of US steel companies rose, with Cleveland-Cliffs jumping 24.6pc, Nucor up 9.7pc and Steel Dynamics 10.1pc higher.

However, shares of carmakers fell. Ford is down 3.5pc and General Motors is down 4.3pc.

“People have been thinking about that (steel tariffs) and trying to formulate the economic impact. It presents the markets with a lot of uncertainty right now,” said Peter Andersen, founder at Andersen Capital Management.

04:01 PM BST

Norwegians flock to buy Teslas despite ties to Trump

Norwegians have flocked back to Elon Musk’s car company after it offered zero-interest loans and a new Model Y, now the best-selling car in the country for three months running.

For the first five months of the year, Tesla sales increased by 8.3pc - lower than the overall new car market which grew by 30.6pc.

Over that period, Tesla had a market share of 12.9pc, second to German auto giant Volkswagen.

Jonathan Parr, an analyst at used-car dealer Rebil, told broadcaster TV2 that “ultimately, it’s the price that Norwegian motorists care about most.”

“Norwegians don’t like Musk but feel no shame owning a Tesla,” Mr Parr explained.

However, new figures for France show that Tesla sold just 721 cars last month in France, a plunge of 67pc compared with a year earlier.

Tesla sales fell by half in the European Union in April, according to the European Automobile Manufacturers’ Association (ACEA).

The company’s EU market share dropped to 1.1pc amid growing competition from Chinese rivals and consumers protesting Mr Musk’s politics and ties to Donald Trump.