U.S. President Donald Trump talks tough about trade with Canada over the weekend

Europe’s main stock gauge was little changed Monday, with analysts citing uncertainty over global trade tensions. Trading could be somewhat muted as U.S. investors take a break for Labor Day.

What are markets doing?

The Stoxx Europe 600 SXXP, +0.09%  was recently roughly flat at 382.39, after Friday’s 0.8% drop that left it down 2.4% for August.

The pan-European gauge is showing a decline of nearly 2% for the year to date.

Germany’s DAX 30 DAX, -0.16%  shed 0.2% to 12,335.92, while France’s CAC 40 PX1, +0.06%  lost 0.1% to 5,402.34. The U.K.’s FTSE 100 UKX, +0.83% bucked the negative trend, rising 0.6% to 7,476.44.

The euro EURUSD, +0.0689%  bought $1.1609, little changed from $1.1604 late Friday in New York.

What is driving the market?

Trade talks between the U.S. and its partners have been a source of volatility for global markets in recent months. The spotlight lately has been on the Trump administration’s stance toward Canada.

Over the weekend, President Donald Trump tweeted that there is no overriding political imperative to include Canada in a revamped version of the North American Free Trade Agreement.

His comments come after a tentative deal with Mexico to rewrite Nafta appeared to signal that the White House is willing to compromise on its hardline demands and avert ruinous trade wars.

What are strategists saying?

“If it turns out to be true that President Trump doesn’t even want a deal, then last week’s optimism could well soon give way,” said Michael Hewson, chief market analyst at CMC Markets UK, in a note.

“As we head into a new week and month, it is these concerns that will remain front and center of investors’ minds, along with increasing concerns about stability in emerging markets,” Hewson added, referring to worries about trade tensions as well as Turkey and Argentina, whose currencies have tumbled.

Stock movers

Shares in Dechra Pharmaceuticals PLC DPH, -14.04% dived 15% after the company, which produces pharmaceutical products for animals, said its pretax profit rose modestly as increased costs largely balanced out revenue growth.

WPP PLC’s stock WPP, -0.55%  rose 0.6% after the advertising giant picked Mark Read as its new CEO, placing a company veteran at the helm following the departure of founder Martin Sorrell.