London close: Reports of new trade threats take their toll

London stocks cratered on Monday, with miners under the cosh as investors grew increasingly jittery following reports of more trade threats from US President Trump.

US Treasury Secretary Steve Mnuchin rubbished those reports after the close of trading in London, but the damage had already been inflicted, as already jumpy investors dumped stocks.

The FTSE 100 was down 2.24% to 7,509.84, while the pound was off 0.29% against the euro at 1.1350 but 0.05% higher versus the US dollar to 1.32722.

Overnight, the Journal had reported that the White House was set to announce new curbs on Chinese investments in the US for reasons of "national security", with a draft series of restrictions on inbound Chinese investments due to be published later in the week.

For its part, Bloomberg reported Chinese investments in certain companies would be declared a threat to America's economic and national security.

However, according to Mnuchin, "[a statement] will be out not specific to China, but to all countries that are trying to steal our technology."

Even so, on Friday Trump threatened to impose a 20% tariff on all European cars if the EU did not remove its own tariffs and trade barriers, which also marked a potential escalation.

Commenting on the recent headlines on trade, earlier JP Morgan's Mislav Matejka had inked a note to clients, saying: "Trade fears have taken centre stage again. Of course, equities will not ignore a potential further escalation, but it is very difficult to handicap this risk. Our view is that the prospect of significant market falls and a dent to corporate confidence in the run-up to November mid-term elections will ultimately prevent the US administration from actually implementing these policies.

"Admittedly, the visibility on this remains poor and the near term headline newsflow risk is likely to stay elevated, so there is a chance that bears do get their long predicted market fall, but for the wrong reasons."

Meanwhile, oil prices were mixed after an initial surge following Opec's decision last Friday to boost production, with market participants having been left a tad confused by oil cartel OPEC's announcement last Friday.

Brent crude was 1.6% lower at $74.37 a barrel, while West Texas Intermediate was down up 0.22% to $68.43.

According to Reuters, and in what may have been an attempt to clarify matters, at the weekend Saudi's Khalid al-Falih indicated that combined OPEC and non-OPEC output would increase by 1.0m barrels a day.

The EU summit is due to kick off later in the week, with Brexit set to be in focus again after hard-line Brexiteers ramped up pressure on Prime Minister Theresa May over the weekend for a no deal plan, while business lobby groups co-ordinated pressure on the other side with a letter to 10 Downing Street. As well as Brexit, the main issues on the agenda at the summit will be the structure of the EU and immigration.

In corporate news, serviced office group IWG bucked the trend after announcing that it has been approached by another private equity suitor about a potential takeover, with Terra Firma entering the fray. IWG's board, which notified of the approach on Saturday after it had been leaked in the press, said it was evaluating a possible cash offer from Terra Firma Investments.

Eastern Mediterranean-focussed exploration and production company Energean Oil and Gas nudged up after saying it has made the decision to drill an exploration well in the Karish North prospect, offshore Israel, with a planned spud date before the end of March 2019, subject to necessary approvals.

On the downside, miners were the biggest drag, with Anglo, Glencore, Antofagasta, and BHP Billiton among the top fallers.

Software and information technology business Micro Focus was under pressure after US peer Red Hat cut its full-year revenue forecast last week.

Synthomer slipped as it announced a refinancing of its existing bank facilities, consisting of an offering of €300m (£263.5m) in seven-year unsecured senior notes, and a new €300m four-year revolving credit facility.

Melrose Industries was also lower after being given clearance from the Committee on Foreign Investment in the United States for its takeover of defence contractor GKN.

Outside the FTSE 350, estate agent Countrywide tumbled after cutting its adjusted earnings guidance for the first half again and announcing an equity raising to reduce debt.

Elsewhere, Rolls-Royce retreated despite an upgrade to 'hold' from 'reduce' at Kepler Cheuvreux.

Market Movers

FTSE 100 (UKX) 7,509.84 -2.24%
FTSE 250 (MCX) 20,774.42 -1.12%
techMARK (TASX) 3,475.29 -1.68%

FTSE 100 - Risers

ITV (ITV) 177.00p 0.23%
United Utilities Group (UU.) 751.00p 0.05%
Associated British Foods (ABF) 2,836.00p 0.04%
Sky (SKY) 1,415.00p 0.00%
Old Mutual (OML) 210.90p 0.00%
Severn Trent (SVT) 1,927.50p -0.05%
Just Eat (JE.) 822.60p -0.22%
Centrica (CNA) 157.65p -0.22%
Tesco (TSCO) 261.10p -0.23%
Land Securities Group (LAND) 950.30p -0.23%

FTSE 100 - Fallers

Carnival (CCL) 4,215.00p -11.13%
Micro Focus International (MCRO) 1,293.00p -5.21%
Glencore (GLEN) 369.00p -4.69%
Anglo American (AAL) 1,620.20p -4.53%
TUI AG Reg Shs (DI) (TUI) 1,656.50p -4.36%
Melrose Industries (MRO) 212.60p -4.19%
International Consolidated Airlines Group SA (CDI) (IAG) 697.80p -3.96%
Prudential (PRU) 1,744.00p -3.86%
BHP Billiton (BLT) 1,602.80p -3.81%
Reckitt Benckiser Group (RB.) 6,080.00p -3.78%

FTSE 250 - Risers

Indivior (INDV) 382.30p 4.40%
Inmarsat (ISAT) 632.20p 4.32%
Cairn Energy (CNE) 238.20p 4.11%
IWG (IWG) 326.80p 3.25%
Sirius Minerals (SXX) 32.38p 2.22%
Euromoney Institutional Investor (ERM) 1,374.00p 2.06%
Renewi (RWI) 80.50p 1.90%
Dixons Carphone (DC.) 199.90p 1.47%
Cineworld Group (CINE) 268.80p 1.36%
TP ICAP (TCAP) 417.10p 1.24%

FTSE 250 - Fallers

Thomas Cook Group (TCG) 108.50p -5.32%
Wizz Air Holdings (WIZZ) 3,583.00p -5.24%
QinetiQ Group (QQ.) 256.60p -4.96%
Ferrexpo (FXPO) 187.35p -4.75%
Petrofac Ltd. (PFC) 536.20p -4.66%
Kaz Minerals (KAZ) 821.60p -4.62%
Aveva Group (AVV) 2,740.00p -4.53%
Vedanta Resources (VED) 632.40p -4.33%
Premier Oil (PMO) 114.30p -4.18%
FirstGroup (FGP) 79.90p -4.02%