By Medha Singh and Agamoni Ghosh
(Reuters) - European shares logged their worst day in three weeks on Wednesday on mounting worries that rising U.S.-China tensions could take a toll on trade negotiations between the two countries.
The pan-European STOXX 600 <.STOXX> slipped 0.4%, with London's FTSE 100 <.FTSE> leading declines among most regional indexes trading in the red.
Sectors sensitive to tariff related headlines including autos <.SXAP> and mining stocks <.SXPP> were down more than 0.4%.
The U.S. Senate unanimously passed a bill on Tuesday aimed at protecting human rights in Hong Kong, drawing condemnation from Beijing.
"This deal is so not even there...there's a good reason it could fall through altogether," said Tom Martin, portfolio manager at Globalt in Atlanta.
"Both sides want to reassure the markets but at the base level, if they still don't agree on tariffs and other issues, its just not going to go through."
Expectations that the world's top two economies would strike a trade deal have been instrumental in driving the STOXX 600 to a four-year peak. The benchmark index is now about 3% away from its record high.
The travel and leisure sectors <.SXTP> posted the steepest slide among sub-sectors, led by losses in UK's SSP Group Plc shares <SSPG.L> after the airport and train food operator issued a cautious full year outlook.
Also weighing on the index were declines in shares of Germany's Lufthansa <LHAG.DE> which is likely to face a trade union strike during the busy Christmas period if it does not make wage concessions.
Home improvement retailer Kingfisher's <KGF.L> slumped 7% and was at the bottom of the benchmark index after it reported a decline in quarterly sales.
On the bright side, Nexi <NEXII.MI> shares jumped 5%, helping the Milan <.FTMIB> index stay in positive territory, after Italy's biggest retail bank Intesa Sanpaolo <ISP.MI> said it was in early talks with the payments group for a potential deal.
European banks <.SX7P> also slipped, as safety buying pushed the benchmark German bond yields near their lowest levels this month. The U.S. yield curve continued to flatten, with the spread between two-year and 10-year note yields hitting its narrowest in three weeks.
Sectors considered as safe havens during times of economic strife, including telecoms <.SXKP> and utilities <.SXDP>, ended flat to marginally lower.
(Reporting by Medha Singh and Agamoni Ghosh in Bengaluru; Editing by Shounak Dasgupta, Uttaresh.V, William Maclean)