European stocks fall under the weight of Italian bank stocks and weak data

European stocks fell on Tuesday as Italian banks came under pressure after the cabinet approved a 40 percent tax on bank windfalls, and persistent inflation in Germany and weak trade data in China weighed on risk appetite.

The pan-European Stoxx 600 index was down 0.3 percent by 0707 GMT.

Shares in Italian banks such as Intesa Sanpaolo and UniCredit fell more than 5 percent after Deputy Prime Minister Matteo Salvini announced that a 40 percent tax on banks’ extra profits would be used to fill items such as tax cuts and subsidies for mortgage holders to buy their first home.

The Italian banking index fell 1.4 percent, while the European banking stock index fell 1.8 percent after Moody’s downgraded the credit rating of several small and medium-sized US banks and said it might downgrade a number of the largest banks in the United States.

Germany’s DAX fell 0.4 percent after data showed inflation eased to 6.5 percent in July, but still within economists’ expectations.

Mining and automakers with exposure to China fell after data showed imports and exports in the world’s second-largest economy fell in July much faster than expected, threatening growth prospects and piling pressure on Beijing for new stimulus measures.

Glencore shares fell nearly 3 percent after the global miner reported that its profits had halved in the first half of the year.