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Pharma giants drop after Trump touts 'major' tariff plans

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Germany's Merz unveils coalition deal

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Energy stocks hit by four-year low in oil prices

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Investors flee from U.S. bonds to cash

(Updates through market close)

By Sukriti Gupta and Lisa Pauline Mattackal

April 9 (Reuters) - European shares tumbled further on

Wednesday as China more than doubled its tariffs on U.S.

imports, with healthcare stocks leading declines after U.S.

President Donald Trump threatened more sector-specific tariffs.

The pan-European STOXX 600 slumped 3.5%, as the

previous session's rally fizzled out.

The healthcare sector fell 5.8% to its lowest level

since October 2022 after Trump reiterated plans for a "major"

tariff on all pharmaceutical imports. Pharma giants Roche

, Novartis, Novo Nordisk and

AstraZeneca ( AZN ) all dropped between 6.9% and 5.8%

China will impose 84% tariffs on U.S. goods from Thursday,

up from the 34% previously announced, its finance ministry said,

after Trump's 104% tariffs on Chinese imports took effect on

Wednesday.

The trade war absorbed most of investors' attention,

with the market little moved by news that German conservatives

had clinched a coalition deal with the centre-left Social

Democrats (SPD) after weeks of haggling, and by their outlining

a raft of policies designed to revive stalled economic growth.

The tit-for-tat tariffs unleashed a fresh wave of

selling on global markets, with investors exiting safe haven

U.S. bonds amid fears that the trade war will severely hit

economic growth and also stoke up inflation.

"There hasn't been any significant progress in terms of

negotiations between the U.S. and the countries that have been

hit by these reciprocal tariffs... In our view, there's no way

China can back down," said Andrea Cicione, head of research at

TS Lombard.

"We might get some relief if some of these negotiations

yield some success... but until that happens it's difficult to

turn much more constructive as the risk of recession is going

up."

"The negative impact from a (potential) U.S. recession

would definitely trump, in the near term, any benefits from

increased (German) fiscal spending, Cicione said.

German stocks fell 3%. The STOXX 600 is

currently more than 16% below its March all-time closing high,

nearing the 20% threshold that would confirm a bear market.

The European Union also said it would impose

25% tariffs

on a range of U.S. imports in a first round of

countermeasures, after the United States' country-specific

levies also went into effect.

Rate-sensitive banks slumped 3.1% as traders fully

priced in an interest rate cut from the European Central Bank

next week to shore up the deteriorating economy.

The ECB is ready to preserve financial stability in case

of further market turmoil,

policymakers

said, while flagging increased risks to the euro area's

growth.

Energy stocks slumped 5% as oil prices tumbled to

their lowest in four years, while miners fell 3.7% on

fears of slowing demand from top metals consumer China.

Germany's Redcare Pharmacy ( SHPPF ) slumped 16.7% after

launching a convertible bonds offering.