*

Pharmaceuticals and autos are key focus areas in US-EU

trade

talks

*

Citi strategist warns positive trade developments needed

by

August 1 to sustain market gains

*

S&P 500 ends week down 0.3%, near record highs

By Lewis Krauskopf

NEW YORK, July 11 (Reuters) - Investors awaited tariff

news between the U.S. and European Union on Friday that could

add a potentially volatile development to the end of a week in

which President Donald Trump reignited his global trade war.

The European Union was bracing for a possible letter from

Trump outlining planned duties on the United States' largest

trade and investment partner. The U.S. president this week

outlined new tariffs on U.S. imports of goods from a number of

countries, including allies Japan and South Korea, along with a

50% tariff on U.S. imports of copper. Trump also announced a

hike to 35% on Canadian goods.

The EU initially hoped to reach a comprehensive trade deal, but

after months of difficult talks, a person with knowledge of the

U.S.-EU talks said it was hard to predict if the bloc would

receive a letter announcing more tariffs or when any agreement

might be finalised.

"We get bad news from the euro zone ... and that's clearly

going to be bad news for markets and sentiment," said Art Hogan,

chief market strategist at B Riley Wealth.

Pharmaceuticals and autos are among the areas in focus

between the U.S. and Europe, while "across the board, we do a

massive amount of trade," Hogan said.

"Right when we thought we had the exit on this trade war

highway in sight, it's getting further off in the distance, and

it's not looking prettier," Hogan said, speaking broadly.

Despite some modest rockiness this week, the benchmark S&P

500 ended down just 0.3% on the week and not far from

record-high levels. U.S. stocks have rebounded after plunging in

April following Trump's "Liberation Day" announcement of

sweeping global tariffs. Trump had paused many of those steep

tariffs but issued new levies this week with an August 1 date

for them to go into effect.

The CBOE Volatility Index, Wall Street's "fear

gauge," closed on Thursday at 15.78, its lowest closing level in

nearly five months, although it moved back above 16 on Friday.

While markets are less sensitive to headlines than a few

months ago, "we will need some positive trade developments by

the White House's August 1 deadline to hold recent equity market

gains," Citi strategist Scott Chronert said in a note on Friday.

The current weighted average tariff in the U.S. is about

16%, up from 2.5% at the start of the year, UBS economists said

on Friday. The rate would rise to about 18%, including the

country tariffs announced in this week's letters, UBS said in a

note.

The UBS economists noted the rate for the EU proposed on the

April 2 "Liberation Day" was double the rate currently faced by

the bloc.

"That increase alone would add nearly (1 percentage point)

to the weighted average tariff rate," UBS said.