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LONDON, Aug 31 (Reuters) - European shares tumbled for a second day on Friday as reports that U.S. President Donald Trump is planning further tariffs on China heated up a trade war, while Whitbread stole the spotlight after clinching a $5.1 billion deal with Coca-Cola.
The pan-European STOXX 600 was down 0.6 percent by 0725 GMT, on track for its biggest fall in a fortnight, while Germany's DAX, heavier in trade-sensitive industrial stocks, fell 0.9 percent.
Trade sparring between Trump and the European Union weighed on car stocks, down 1.5 percent and the worst-performing sector.
European Commission President Jean-Claude Juncker said the EU would respond in kind if the U.S. imposed car tariffs, after Trump was reported to have rejected the EU's offer to eliminate car tariffs, saying its trade policies are "almost as bad as China".
In M&A news, Whitbread soared as much as 19 percent after the UK firm agreed the sale of its Costa Coffee chain to Coca-Cola for 3.9 billion pounds ($5.1 billion).
Traders said the deal value exceeded the market's expectations by 500 to 900 million pounds, and was wrapped up more quickly than forecast.
Whitbread aside, there were many substantial falls across the European market.
Sage tumbled 9 percent, the biggest faller among European stocks, after the British software developer surprised the market by announcing chief executive Stephen Kelly would stand down in May next year.
Air France fell 4.3 percent, extending Thursday's losses after unions threatened further strikes.
German carrier Lufthansa also fell 4.6 percent, with traders citing a Citi note rating the stock a "sell" and analysts preferring low-cost European airlines.
Shares in Edenred fell 3 percent after Berenberg cut the stock to "sell" from "hold", saying its business model remains structurally challenged. (Reporting by Helen Reid, Editing by Jan Harvey)