European markets retreat from China stimulus rally; Brandy makers slump on tit-for-tat tariffs

European markets were lower Tuesday afternoon as regional sentiment soured further after a shaky start to the week, with investors responding to a slowdown in China’s stimulus rally.

The pan-European Stoxx 600 was down 0.47% by 4:05 p.m. London time, with all major bourses and the majority of sectors trading in the red. Mining stocks shed 4.26% while household goods fell 1.35%.

European drinks makers LVMH, Pernod Ricard and Diageo slumped lower after China announced temporary anti-dumping measures on European brandy imports, days after the EU’s vote on EV tariffs.

It comes amid a wider fall in luxury and mining stocks, as sentiment turned negative on a potential demand boost from stimulus measures in the key Chinese market.

U.S. stocks rebounded following a losing day on Wall Street Monday, as investors monitored a cooling in oil futures.

In the Asia-Pacific region, an initial rally for Chinese markets lost steam after a briefing from the country’s National Development and Reform Commission provided few details on further stimulus.

Earlier, mainland China’s CSI 300 index had skyrocketed over 10% at the open at its return from the Golden Week holiday, but the index pared gains later in the session.

Key releases for markets this week include U.S. Federal Reserve minutes and German trade on Wednesday, U.S. inflation on Thursday and U.K. economic growth on Friday.