London close: Stocks drop as investors eye Sino-US talks
London stocks fell on Thursday amid growing concerns about Sino-US trade relations, after US President Trump blamed China for the breakdown in talks between the two nations, while ex-dividends also weighed.
The FTSE 100 closed down 0.9% at 7,207.41, while the pound was up 0.1% against the dollar at 1.3012 and 0.3% lower versus the euro at 1.1590.
All eyes were firmly on the next round of negotiations between the US and China in Washington after Trump said at a rally in Florida on Wednesday that China "broke the deal" in trade talks.
Chris Beauchamp, senior market analyst at IG, said: "As the week pushes on, it looks increasingly likely that the US-China trade spat is developing into a full-blown economic conflict; earlier reports suggested that Chinese officials were still intent on making a deal this week, but recent updates suggest that Beijing is girding itself to respond in kind to the US’ impending imposition of tariffs.
"This prospect of increased trade barriers has prompted further losses in equities, with the Dow shedding another 300 points in early trading on Wall Street. This decline erodes the last four weeks of gains, and proves that, with the Fed now much less of a concern for markets, the antipathy between the world’s two largest economies is now the prime reason for worry. Major indices in Europe and the US are still comfortably up on the year so far, and the lack of drama in markets so far this year undoubtedly magnifies the ongoing sell-off, but it is still the issue that has the potential to shock markets more than any other."
On home shores, Prime Minister Theresa May was said to be planning to reintroduce her thrice-defeated EU withdrawal agreement for a vote before the EU parliamentary elections on 23 May.
Elsewhere, investors were mulling the latest survey from the Royal Institution of Chartered Surveyors, which showed the housing market remained in the doldrums last month.
The RICS gauge of house prices was steady in April from March at -23, remaining at its worst level in nearly eight years. Analysts had been expecting a reading of -22.
RICS said: "Market trends remain very similar to those reported in recent months, with headline indicators on demand, supply and prices all still stuck in negative territory. Brexit uncertainty and a lack of available stock to purchase remain the key constraints, meaning little change in momentum is anticipated in the near term. That said, expectations are at least slightly more positive at the twelve month horizon."
In equity markets, Centrica, Admiral, Hiscox, Card Factory, Polymetal and Ibstock all retreated as their stock went ex-dividend.
Paddy Power, GVC Holdings and William Hill were all lower after a new study in the British Medical Journal suggested there should be a mandatory tax on the gambling industry to treat addiction in the UK.
BT was in the red as it reported a drop in revenue and just a slight uptick in full-year profit as a solid performance from the consumer business was offset by weakness in the enterprise segment.
Shares in engineer IMI slid after it said trading conditions in the first quarter remained mixed, with organic sales down 2% year-on-year.
Morrisons ended a little weaker as it reported slowing sales growth in the first quarter. Like-for-like sales in the 13 weeks to 5 May, excluding fuel, rose 2.3%, while retail sales were up 0.2% and wholesale sales rose 2.1%.
Metro Bank slumped as investors shorted the stock amid expectations that the share price will fall further as it looks to raise £350m in a placing.
On the upside, Barratt Developments advanced after the housebuilder said the outlook for the full year was "modestly" above the board's previous expectations. Fellow housebuilder Berkeley was also in the green.
RSA Insurance gained as it posted 3% increase in first-quarter net written premiums, thanks mostly to a solid performance in Canada.
Acacia Mining shares shone as it reported a jump in April gold production, boosted by a 54% increase in output from its North Mara gold mine in Tanzania.
Market Movers
FTSE 100 (UKX) 7,207.41 -0.87%
FTSE 250 (MCX) 19,285.58 -1.26%
techMARK (TASX) 3,534.83 -1.02%
FTSE 100 - Risers
Barratt Developments (BDEV) 600.00p 2.39%
RSA Insurance Group (RSA) 546.40p 2.25%
Imperial Brands (IMB) 2,227.50p 2.16%
Smith & Nephew (SN.) 1,603.00p 1.71%
British American Tobacco (BATS) 2,885.50p 1.42%
Berkeley Group Holdings (The) (BKG) 3,697.00p 1.23%
TUI AG Reg Shs (DI) (TUI) 825.80p 0.81%
Sainsbury (J) (SBRY) 210.60p 0.77%
Reckitt Benckiser Group (RB.) 6,143.00p 0.72%
Taylor Wimpey (TW.) 177.60p 0.71%
FTSE 100 - Fallers
Centrica (CNA) 94.20p -10.29%
Informa (INF) 752.20p -4.58%
Admiral Group (ADM) 2,037.00p -4.17%
ITV (ITV) 118.75p -3.92%
BT Group (BT.A) 210.60p -3.88%
Kingfisher (KGF) 244.20p -3.86%
Intertek Group (ITRK) 5,024.00p -3.64%
Smith (DS) (SMDS) 335.60p -3.56%
Hiscox Limited (DI) (HSX) 1,559.00p -3.53%
Just Eat (JE.) 673.20p -3.14%
FTSE 250 - Risers
Sirius Minerals (SXX) 17.49p 9.56%
Funding Circle Holdings (FCH) 236.00p 3.51%
Acacia Mining (ACA) 150.30p 3.02%
Indivior (INDV) 42.32p 2.84%
Avast (AVST) 313.40p 1.75%
Derwent London (DLN) 3,250.00p 1.63%
Hammerson (HMSO) 296.40p 1.61%
Go-Ahead Group (GOG) 1,913.00p 1.53%
AJ Bell (AJB) 477.00p 1.49%
Tate & Lyle (TATE) 756.40p 1.23%
FTSE 250 - Fallers
Metro Bank (MTRO) 541.00p -8.31%
Premier Oil (PMO) 85.68p -5.85%
William Hill (WMH) 141.30p -5.58%
Polymetal International (POLY) 773.20p -5.01%
Card Factory (CARD) 189.70p -4.91%
IMI (IMI) 967.20p -4.62%
Fidelity China Special Situations (FCSS) 222.27p -4.31%
Beazley (BEZ) 538.50p -4.27%
Saga (SAGA) 54.80p -4.20%
Ibstock (IBST) 249.20p -4.01%