(Corrects a typo in paragraph 10)
* Hexagon slips after Q2 sales warning
* Chipmakers weak after Samsung’s forecast
* German industrial orders weaker than expected in May
July 5 (Reuters) - European shares snapped its six-day winning streak on Friday as industrial stocks slid after Sweden’s Hexagon gave a downbeat outlook blaming the U.S.-China trade war and investors stayed cautious ahead of a crucial U.S. jobs data.
The pan-European STOXX 600 index was down 0.3% by 0815 GMT, but was still set for its fifth straight weekly rise.
The index had closed at a more than 12-months high a day before, helped by a rally fuelled by hopes of an easing economic policy from major central banks and by news that the United States and China were going to restart their trade talks.
Citi economist Catherine Mann said the temporary trade truce is vulnerable to further escalation should the negotiations fall apart.
“The U.S.-China handshake has not removed trade policy uncertainty, which is still weighing on the global growth outlook,” Mann said.
Meanwhile, the long-drawn trade spat showed its impact on Swedish industrial technology group Hexagon, which announced 700 job cuts and warned of a drop in quarterly organic sales.
Its shares tumbled 13.6% to the bottom of STOXX 600. The results weighed on the shares of Schneider Electric, Siemens and Sandvik and pulled the industrial index down 1.5%.
“Industrials are in focus this morning and attracting the most action following the surprise warning from Hexagon,” a trader said. “A fairly big cut for a 1-month downturn, citing China, sending shockwaves into the local companies and Chinese tech exposures.”
The pain from the tit-for-tat U.S.-China tariff war on the semicondutor industry once again came to the fore after Samsung Electronics forecast a plunge in its second-quarter operating profit.
The news dragged technology shares 0.8% lower, with AMS, STMicroelectronics and Siltronic slipping between more than 1%.
In U.S. financial markets, investors will return from Independence Day holiday to focus on the non-farm payrolls, which is due at 12:30 GMT.
U.S. job growth was likely to rebound in June, but that would probably not be enough to discourage the Federal Reserve from cutting interest rates this month amid growing evidence the economy is slowing.
Dampening the sentiment further was data which showed German industrial orders fell far more than expected in May.
Defensive sectors such as real estate, utilities and telecom, which are popular in times of economic strife, eked out gains, while mining stocks, down 1.7%, were among the biggest drags on the markets.
Britain’s FTSE 100 fell 0.25%, more than its peers, pressured by declines in mining majors Rio Tinto plc and BHP Group. (Reporting by Medha Singh and Josephine Mason in Bengaluru; Editing by Arun Koyyur)
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