(Bloomberg) -- European equities retreated to the lowest level in more than 20 months, led by commodities-linked stocks, amid concerns about the U.S.-China trade spat damaging corporate earnings.

The Stoxx Europe 600 Index tumbled 1.7 percent to the lowest level since January 2017. Total and Shell declined more than 2 percent as Brent oil dropped. Italian stocks slumped, poised for a bear market. Tech shares were also under pressure.

European stocks sank to the lowest level since March on Wednesday as investors turned defensive amid concerns ranging from slowdown in demand for luxury fashion products and microchips to the sustainability of Italy’s debt. Investors will be carefully watching the earnings reports for signs of profits being hurt by the trade wars after Fastenal Co. warned that new U.S. tariffs on China-sourced goods are “directly impacting" customers.

“One thing is for sure that bears are feeling hungry today, so watch out because it’s dangerous out there,” said Naeem Aslam, chief market analyst at Think Markets UK. “Things have only started to fall off the cliff.”

To contact the reporter on this story: Ksenia Galouchko in London at kgalouchko1@bloomberg.net

To contact the editors responsible for this story: Blaise Robinson at brobinson58@bloomberg.net, Monica Houston-Waesch

©2018 Bloomberg L.P.

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