LONDON (Reuters) – Worries about U.S. bond markets signaling an impending recession, and a still rumbling trade war between the world’s top two economies, saw European shares sink further on Wednesday after a 3 percent drop on Wall Street the previous day.

The pan-European STOXX 600 ended down 1.2 percent at its lowest level since Nov. 23. The euro zone .STOXXE stock index and Germany’s DAX .GDAXI also fell 1.2 percent. U.S. stock markets were shut on Wednesday for a day of mourning in honor of former president George H.W. Bush who died last week.

Cyclical sectors like construction .SXOP and miners .SXPP posted the biggest falls, down 2.2 and 1.8 percent respectively, as investors dumped stocks highly sensitive to economic growth.

“Cyclicals are really dependent upon accelerations in growth, they’re very real economy sensitive for higher revenues,” said John Ricciardi, CEO and lead portfolio manager at Kestrel Investment Partners.

The inversion of parts of the U.S. yield curve means investors are beginning to panic about future growth and inflation, Ricciardi added.

Analysts cut their estimates for 2019 earnings growth as markets turned sour this autumn.

Banks .SX7P also fell, down 0.7 percent, but losses were limited by a bounce in Italian lenders .FTIT8300 as Italian government bond yields continued to fall sharply on hopes that Rome could cut its budget spending plans.

Tech stocks .SX8P fell 1.8 percent after the highly valued U.S. tech sector sold off.

Chipmakers AMS (AMS.S), STMicroelectronics (STM.MI) and Infineon (IFXGn.DE) fell 2.3 percent to 6.1 percent following a sharp drop in chip stocks on Wall Street overnight.

German carmakers slightly outperformed the DAX as investors digested what seemed a relatively positive outcome from a meeting of auto executives at the White House.

U.S. President Donald Trump pressed carmakers to increase investments in the United States, something the executives said they planned to do but wouldn’t be able to if the administration went ahead with threatened tariffs.

White House economic adviser Larry Kudlow, among those in the meeting, said he did not think that car tariffs were imminent.

Daimler (DAIGn.DE) and BMW (BMWG.DE) and Volkswagen (VOWG_p.DE) all fell less than 0.9 percent.

Shares in valve manufacturers Rotork (ROR.L) and Weir (WEIR.L), which supply the oil industry, tumbled after U.S. energy services firm Schlumberger (SLB.N) warned on Tuesday, that a drop in fracking activity would hit its North America revenues.

Swedish pharma firm Elekta (EKTAb.ST) was a rare gainer, up 3.5 percent after it won Food & Drug Administration clearance for its “Unity” radiation therapy, clearing it for commercial sales and clinical use in the United States.

M&A news was also a driver.

Shares in Shire (SHP.L) jumped 3 percent after shareholders of Japan’s Takeda approved the takeover of the London-listed pharmaceutical firm.

Among small-caps, Swedish retailer Clas Ohlson (CLASb.ST) provided the latest example of the squeeze on the sector to close physical stores as shoppers switch to online purchases.

Its shares opened down 5 percent but swung back to end up 6.4 percent as investors welcomed its new strategy including closures of loss-making stores in Britain and Germany.

Broker notes hit some stocks. Hargreaves Lansdown (HRGV.L) fell 4.4 percent after Morgan Stanley cut its rating to underweight.

Saint Gobain (SGOB.PA) shares fell 3 percent, the worst performer on the CAC 40, after JP Morgan cut it to “neutral” from “overweight”.

Altran (ALTT.PA) shares fell 8 percent after the company announced its North America chairman Frank Kern will retire.

Graphic: Global earnings growth expectations – tmsnrt.rs/2RvgzDw

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