European stocks fell in holiday-thinned trading on Thursday, with banks, automobile makers and software companies bearing the brunt of losses after fresh signs of tensions between the U.S. and China.

The Stoxx Europe 600

SXXP, -0.23%

slipped 0.2% to 408.82, after logging a new 52-week high on Wednesday, with a gain of 0.3%.

The German DAX

DAX, -0.37%

 fell 0.3% to 13243.96, the French CAC 40 index

PX1, -0.25%

 lost 0.3% to 5907.25. The U.K. FTSE 100

UKX, -0.52%

 dropped 0.5% to 7392.39, as the pound

GBPUSD, +0.1084%

 rose after a YouGov poll for the Times showed Prime Minister Boris Johnson’s Conservative Party will win the December 12 election with a comfortable majority.

U.S. stocks closed modestly higher on Wednesday, but at fresh records. Those markets are shut on Thursday for the Thanksgiving Day holiday, and Friday will see a shortened day of trade.

Equities in Europe and Asia, and U.S. stock futures slipped as China threatened unspecified retaliation after President Donald Trump signed a bill supporting Hong Kong protesters on Wednesday. The angry reaction by China has cast some doubt on the possibly of the two sides reaching a phase one agreement in time for the next round of U.S. tariffs to hit China on December 15.

“We advise the U.S. not to act incautiously, otherwise China will be required to counteract resolutely and all the consequences created by this will have to be borne by the U.S. side,” said China’s foreign ministry in a statement on Thursday.

Banks led the declines, with shares of HSBC Holdings

HSBA, -1.25%

HSBC, +0.24%

 down 0.9% and UBS Group

UBS, +0.49%

UBSG, -0.29%

 dropping 0.8%.

Shares of heavily weighted German business software group SAP

SAP, +0.05%

SAP, -0.54%

 eased 0.6%.

The automobile sector—sensitive to developments on the trade front—also fell, with Daimler

DAI, -0.46%

 down 0.9% and Volkswagen

VOW, -0.71%

 off 0.8%.

Shares of French drinks maker Rémy Cointreau

RCO, -3.00%

 fell 2.8% after first-half results missed already lowered market expectations, noted Citi analyst Simon Hales. “Management has also issued new fiscal year profit guidance and now expects “slight organic growth in operating profit for Group Brands and stable operating profit for the group,” he told clients in a note.

Shares of Jerónimo Martins SGPS

JMT, -2.84%

 fell nearly 4% after UBS analysts downgraded shares to neutral from buy, as they forecast a tougher 2020-2021 outlook for the Portuguese food distribution and specialized retailer.

On the upside, shares of Virgin Money U.K. (VMUK)

VMUK, +25.77%

 soared 13% after the financial services group results came in slightly better than expected. “Fundamentally we believe it is still undervalued—with benefits (revenue and costs) from the VMUK integration yet to flow,” said a team of analysts led by John Cronin at Goodbody.

Shares of Telefónica

TEF, +1.09%

TEF, +1.71%

 rose 1.2% after the Spanish telecoms group announced a major restructuring with plans to reorganize its business by creating two new units, unifying its business in Latin America and focusing on key markets. The company said the revamp will generate more than 2 billion euros ($2.2 billion) in additional revenues by 2022.

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