UPDATE 2-Trump's China tariff drives European stocks to worst day in 7 months

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* Trump warns of 10% tariffs on $300 billion Chinese imports
* German and French shares worst hit
* Pirelli down after cutting revenue guidance
* Credit Agricole slips after Q2 profit fall

(Updates to close)
By Sruthi Shankar and Medha Singh
Aug 2 (Reuters) - A slump in shares of automakers, miners
and chipmakers led European stocks to their biggest losses in
more than seven months on Friday after Washington's announcement
of new tariffs on Chinese goods raised fears of a further hit to
global growth.
The pan-European STOXX 600 index .STOXX sank 2.5% to hit a
six-week low. Germany's trade-sensitive DAX index .GDAXI
slumped 3.1%, while losses for luxury goods makers, which draw a
large part of their revenue from China, dragged down France's
CAC 40 .FCHI by 3.6%.
Abruptly ending a temporary trade truce between the two
countries, U.S. President Donald Trump said on Thursday he would
impose a 10% tariffs on $300 billion of Chinese exports to the
United States from September 1, prompting Beijing to warn of
retaliation. "When the global economy seems to be quite dependent on the
outcome of trade negotiations, that would almost necessarily
mean the markets are quite volatile as the negotiations
progress," said Bert Colijn, senior economist for eurozone at
ING in Amsterdam. "It's a result of the fact that politics has
taken centre stage for the macro outlook."
Further spooking investors, Bloomberg reported that Trump is
scheduled to make a statement on trade with the European Union
at 1745 GMT on Friday. The technology index .SX8P , which includes chipmakers that
rely heavily on China for their revenue, dropped 3.7%. Shares of
Siltronic WAFGn.DE , Infineon IFXGn.DE , STMicro STM.MI and
ASML ASML.AS dropped 4.8% to 6.3%.
Shares of basic resources companies .SXPP fell the most
among European sectors with a 4.6% drop.
Most of Europe's main markets were set for their worst week
since May, when a sudden breakdown in trade talks between China
and the United States hammered markets.
A rally since then had been fuelled by hopes that major
central banks would adopt looser monetary policy to offset the
trade war's impact on growth, but the European Central Bank and
the U.S. Federal Reserve both disappointed investors last month
with stances that were more cautious than expected.
However, a spike in trade tensions again pushed money
markets to bet the Fed and the ECB will cut rates next month.
Expectations of lower borrowing costs sent yields on
European government bonds to new lows and piled pressure on
banking shares .SX7P . A couple of weak earnings in the sector
also weighed. GVD/EUR
Royal Bank of Scotland RBS.L fell 6.5% after warning that
deteriorating economic conditions before Brexit were likely to
derail next year's profitability, while French lender Credit
Agricole CAGR.PA dropped 4.9% after it said that a weak
performance at its corporate and investment unit had weighed on
its profits. Automakers .SXAP were another weak spot, with Italian
luxury carmaker Ferrari RACE.MI failing to lift its guidance
for 2019 despite strong results in the first part of the year.
Its shares were down 4.4%. Tyremaker Pirelli PIRC.MI dropped 6.9% after cutting
revenue guidance for the second time this year, joining a string
of suppliers hit by a broader auto industry downturn.
Sectors such as utilities .SX6P , healthcare .SXDP and
telecoms .SXKP - seen as less risky during times of economic
uncertainty - posted minimal losses among the major indexes.