UPDATE 1-European shares fall as US tariff deadline looms

European shares fell nearly 1% on Friday, as investors weighed uncertainty over U.S. trade deals ahead of the July 9 deadline.

The pan-European STOXX 600 index was down 0.9% at 539.05 points, as of 0856 GMT, and on track to log a weekly decline. Other regional indexes also declined, with Germany's DAX down 0.9%, France's CAC 40 losing 1.2%, Spain's IBEX falling 1.7%, and the UK's FTSE 100 down 0.4%.

U.S. President Donald Trump said that Washington will start sending letters to countries on Friday specifying what tariff rates they will face on imports to the United States. With Trump's 90-day pause on higher U.S. tariffs ending next week, investors have taken a cautious stance as several large trading partners, including the European Union, are yet to clinch trade deals.

The EU is pushing for an "agreement in principle" with the U.S. ahead of the deadline, seeking immediate tariff relief in key sectors as part of any trade deal. "If we look at the EU, there are tariffs of 25% on autos and auto parts and 50% on aluminum and steel and it seems to be that those tariffs will not be taken down in the negotiations and that would be a traumatically negative outcome for the EU," said Jochen Stanzl, chief market analyst at CMC Markets.

"Everybody's just hoping that those sectoral tariffs are going to go away but you don't know. So, investors are forced to wait and see." Meanwhile, China's Commerce Ministry issued its final ruling on an investigation into brandy imports from the EU, most of which is cognac from France.

China will impose duties of up to 34.9% for five years, starting July 5, on EU brandy producers that either lack minimum price commitments or violate agreed pricing terms. Euro zone banks, mining-related stocks, and retailers were the top laggards, falling 1.4% each.

Trump's tax-cut legislation cleared its final hurdle in the U.S. Congress on Thursday, and he plans to sign it into law later in the day. Italian lender BPER increased its bid for smaller rival Popolare di Sondrio to 5.44 billion euros ($6.39 billion). Shares of BPER were down 2.3% on Friday.

Swiss engineering company ABB said it had signed a 15-year fleet service contract with Royal Caribbean Group, but its shares fell 1.5% despite the announcement. Sweden's Loomis fell 3.8% to trade at the bottom of the STOXX 600 index.

Conversely, shares of Rheinmetall rose 1.7% after Deutsche bank raised its target price on the German defence contractor. Signalling a potential cooling in consumer demand, data showed that Italian retail sales in May dipped 0.4% month-on-month.

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