By Helen Reid
LONDON (Reuters) - Simmering U.S-Chinese trade tensions dented European shares on Monday as investors fled risk at the start of a highly uncertain week, with Britain's parliamentary vote on Brexit also looming and chemicals stocks dented by a BASF profit warning.
The pan-European STOXX 600 (STOXX) index fell 0.9 percent to hit a fresh two-year low, with Britain's FTSE 100 (FTSE) down 0.4 percent and Germany's DAX (GDAXI) down 0.8 percent at around 0930 GMT.
Oil stocks (SXEP) fell 1.1 percent, erasing their 2018 gains. Oil had been the last sector holding onto gains in Europe, and all the STOXX 600 sector indices are now in the red (with falls of 26 percent for autos and banks) or flat on the year.
Shaunak Mazumder, a senior fund manager at Legal & General Investment Management, said a combination of worries about the U.S.-China trade row and the Brexit vote was weighing on the market.
"The market is lacking proper conviction. If the U.S.-China issue blows over, that could give support to the market. But it's difficult to call," he added.
Shares in BASF (DE:BASFn) fell 4.7 percent after the German chemicals firm slashed its forecast for 2018 profits on Friday.
It said the decline was mainly due to its chemicals business, while low water levels on the Rhine and weak automotive demand especially in China were also to blame.
BASF peer Symrise (DE:SY1G) also tumbled 3.1 percent, Sika (S:SIKA) fell 5.1 percent and Imerys (PA:IMTP) lost 5 percent, helping to drag the pan-European chemicals index (SX4P) down 2.5 percent and making it the worst-performing sector.
Construction and materials stocks (SXOP), also highly sensitive to economic growth, fell 1.5 percent, while autos stocks (SXAP) declined 1.3 percent as trade tensions took their toll.
Unless U.S.-China trade talks wrap up successfully by March 1, new tariffs will be imposed, U.S. Trade Representative Robert Lighthizer said on Sunday, clarifying there is a "hard deadline".
Chipmakers AMS (S:AMS), Siltronic (DE:WAFGn) and STMicro (PA:STM) fell 2.9 to 5.1 percent as investors ditched the tech sector.
Outside of trade, politics drove some of the biggest moves.
French retail, hotel, and transport stocks tumbled anew after a fourth weekend of "yellow vest" protests which are disrupting the economy.
LVMH (PA:LVMH) and Kering (PA:PRTP) were among the biggest drags on the STOXX. But France's CAC 40 (FCHI) overall did not underperform European peers, down just 0.6 percent.
Shares in British energy utilities Centrica (L:CNA) and SSE (L:SSE) fell around 3 percent as investors held their breath ahead of a crucial vote on Brexit on Tuesday.
Traders said a Sunday Telegraph report flagging a risk Centrica may struggle to pay its dividend was also hurting sentiment.
British housebuilders Berkeley Group (L:BKGH), Persimmon (L:PSN), Taylor Wimpey (L:TW) and Barratt Development (L:BDEV) fell 1.5 to 2.5 percent as nerves built and Peel Hunt cut its ratings.
Outside large-cap moves, shares in Interserve (L:IRV) plunged as much as 71 percent, last trading down 51 percent, after the embattled British outsourcer said it was in talks with debtholders and considering converting debt to equity.
Stoxx 600 sectors erase gains Dec 10 - https://tmsnrt.rs/2QL7Foh