London close: Shares retreat as mining, travel sectors slide

London stocks retreated a little on Tuesday, with the travel sector under pressure after another profit warning from Thomas Cook and miners hit by concerns about global trade.

The FTSE 100 finished down 19 points of 0.3% to 7,016.85, while the pound tumbled 0.8% against the resurgent dollar to 1.2729 and dipped 0.2% versus the euro to 1.1285 amid continued concerns about how Theresa May will get her Brexit deal through Parliament, especially after Donald Trump weighed in on the debate.

Trump said May's Brexit agreement was a "great deal for the EU" but could mean that the US stops trading with the UK. In a speech outside the White House on Monday, the US President said: "I think we have to take a look at, seriously, whether or not the UK is allowed to trade. Because, you know, right now, if you look at the deal, they may not be able to trade with us."

However, a Downing Street spokesperson later played down the claims.

Meanwhile, US-China relations were in focus again after Trump renewed his China tariff threats ahead of the G20 meeting at the end of the week, though China's foreign ministry spokesman told reporters that Trump and president Xi Jinping had agreed to reach a "mutually beneficial" arrangement on trade.

Reports of Trump and Xi's agreement initially prompted a flurry of buying, pushing US stock futures up around 1% in a matter of minutes. However, the move was erased when it became clear that the comments were referring to a telephone call at the start of the month.

This fresh bout of doubts over the upcoming G20 meeting hit market sentiment on the continent and on Wall Street, noted market analyst Joshua Mahony at IG. "Traders have been taught to be sceptical over recent years, for as soon as a potential resolution comes into sight, it is swiftly dismissed," he said.

"While we could see a breakthrough in talks between the US and China, Trump’s decision to lay out the potential tariffs he would impose if talks are unsuccessful could easily throw off the Chinese. We have seen plenty of evidence that the Chinese leadership are unwilling to look weak in the face of apparent blackmail from the US."

On the UK data front, retail sales were reported to have picked up in early November, according to the latest survey from the Confederation of British Industry, although the outlook weakened.

The reported sales balance rose to +19 this month from +5 in October, coming in ahead of expectations for a balance of +10.

Anna Leach, head of economic intelligence at the CBI, said it was encouraging to see sales had strengthened in November. However, she also said that business sentiment remains poor, investment intentions are flat and headcount continues to decline.

In corporate news, shares in FTSE 250 tour operator Thomas Cook were in freefall after it withdrew its dividend and cut its annual profits guidance for the third time this year. Trading is still not back to full strength in the new financial year either, with bookings for the coming winter down 3% on last year and a "mixed start" to for summer 2019, with the UK source market appearing solid but Northern and Continental Europe more mixed.

FTSE 100 peer TUI was also on the back foot, while easyJet, Ryanair and Wizz Air were also in the red, but On The Beach finished slightly higher after a bad start.

Russ Mould, investment director at AJ Bell, said suspending the dividend was a sensible move, even if it does deprive shareholders of a stream of cash.

"Too often companies keep the payment intact, knowing that it helps to keep shareholders happy. In reality, it is better to strip back the rewards and put the health of the business first."

Mould said the big concern in the update was the spike in net debt to £389m, which is 45% higher than the consensus analyst forecast of £267m. "Analysts had forecast for the business to move into a net cash position in 2020 and that now seems unlikely unless there is a radical improvement in trading," he said.

Elsewhere, NMC Health was hit by a downgrade to 'underperform' from 'hold' at Jefferies.

Among prominent sector moves, miners were all in the red due to copper prices sliding for the third day, pressured by Trump comments. Housebuilders also retreated amid worries about Brexit, with Barratt, Persimmon, Taylor Wimpey and Berkeley all in the red.

On the upside, Coca-Cola HBC was the standout gainer on the top-flight index as UBS double-upgraded the stock to 'buy' from 'sell' and hiked the price target to 2,650p from 2,050p saying best-in-class growth and balance sheet optionality are no longer priced in.

Bakery chain Greggs surged as it said total sales in the eight weeks to 24 November were up 9% and lifted its 2018 profit forecast. It now expects full-year profit of at least £86m, up from previous guidance of £81.8m.

Quality assurance company Intertek was a high riser as it said group revenue rose 0.5% at actual exchange rates to £2.31bn in the 10 months to 31 October and reaffirmed its 2018 forecast of good organic revenue growth with moderate margin progression at constant currency and strong cash conversion.

Pennon gained as the utility posted a 2.9% rise in first-half pre-tax profit and a 3.1% increase in revenue and Hikma Pharmaceuticals was boosted by an upgrade to 'buy' from 'hold' at Jefferies.

Market Movers

FTSE 100 (UKX) 7,016.85 -0.27%
FTSE 250 (MCX) 18,660.89 -0.31%
techMARK (TASX) 3,451.47 -0.23%

FTSE 100 - Risers

Coca-Cola HBC AG (CDI) (CCH) 2,373.00p 4.58%
Ocado Group (OCDO) 816.00p 3.32%
Kingfisher (KGF) 253.80p 2.30%
Intertek Group (ITRK) 4,752.00p 2.28%
Vodafone Group (VOD) 167.80p 1.81%
National Grid (NG.) 840.50p 1.72%
Marks & Spencer Group (MKS) 309.60p 1.51%
Centrica (CNA) 134.70p 1.43%
Unilever (ULVR) 4,258.50p 1.43%
Rentokil Initial (RTO) 327.90p 1.36%

FTSE 100 - Fallers

Johnson Matthey (JMAT) 2,950.00p -4.13%
GVC Holdings (GVC) 778.50p -3.77%
Antofagasta (ANTO) 778.60p -3.38%
Evraz (EVR) 460.60p -3.26%
Randgold Resources Ltd. (RRS) 6,248.00p -3.22%
Persimmon (PSN) 2,113.00p -2.67%
Fresnillo (FRES) 757.60p -2.60%
Barratt Developments (BDEV) 495.00p -2.56%
TUI AG Reg Shs (DI) (TUI) 1,219.00p -2.48%
Taylor Wimpey (TW.) 147.60p -2.35%

FTSE 250 - Risers

Greggs (GRG) 1,373.00p 10.99%
Spire Healthcare Group (SPI) 130.10p 4.50%
TalkTalk Telecom Group (TALK) 126.50p 4.46%
Equiniti Group (EQN) 235.00p 3.07%
Sophos Group (SOPH) 363.40p 2.83%
Hill & Smith Holdings (HILS) 1,188.00p 2.24%
NewRiver REIT (NRR) 233.00p 2.19%
Hikma Pharmaceuticals (HIK) 1,748.50p 2.13%
Saga (SAGA) 114.50p 2.05%
JPMorgan Indian Investment Trust (JII) 660.00p 1.85%

FTSE 250 - Fallers

Thomas Cook Group (TCG) 37.56p -22.62%
Hochschild Mining (HOC) 152.41p -5.75%
Victrex plc (VCT) 2,534.00p -5.31%
Indivior (INDV) 95.76p -5.09%
Ultra Electronics Holdings (ULE) 1,455.00p -4.65%
Ibstock (IBST) 223.80p -4.28%
UDG Healthcare Public Limited Company (UDG) 596.00p -3.95%
Wizz Air Holdings (WIZZ) 2,961.00p -3.42%
Convatec Group (CTEC) 156.60p -3.24%
Electrocomponents (ECM) 532.80p -3.06%