London close: Stocks end off lows even as Trump ups the ante on China

London stocks ended just a touch weaker on Friday, off earlier lows as investors took US President Trump's latest trade war rhetoric in their stride.

The FTSE 100 closed just 0.1% lower at 7,678.79, while sterling was up 0.1% against the euro at 1.1194 and 0.7% versus the dollar at 1.3110, as the US currency took a hit after it emerged that Trump had said in an interview with CNBC on Thursday that he was ready to impose tariffs on all $500bn of Chinese imports if China doesn't bow to US complaints about its trade policies.

In the interview, Trump criticised the Federal Reserve's interest rate rises, made it clear he wants a weaker dollar and said he was "ready to go to 500" on Chinese imports.

"Because we go up and every time you go up they want to raise rates again…I am not happy about it," Trump told CNBC. "But at the same time I’m letting them do what they feel is best.

"I don’t like all of this work that we’re putting into the economy and then I see rates going up."

The US President also attacked the European Union and China over their currency weakness.

But stock markets proved fairly resilient in the face of Trump's latest comments.

IG analyst Chris Beauchamp said: "After a few days without trade war headlines the topic has come back to life, as Trump turns the trade war rhetoric all the way up to 11 with his announcement that $500 billion of Chinese goods could suffer penalties. Having come away from the NATO summit with an apparent win using his strong-arm negotiating tactics, this move appears designed to bring the Chinese to the table.

"Markets have recovered from their initial shock, perhaps indicating that this kind of newflash is starting to lose its power. The news spoiled the FTSE 100’s attempt to move above the 7700 zone, which has held back progress for over a month now."

With Trump grabbing the headlines yet again, UK data showing that public finances continued to improve in June came and went pretty much unnoticed. According to the Office for National Statistics, government borrowing fell to its lowest level since 2007 in June, potentially giving Chancellor Philip Hammond more room for manoeuvre in his autumn Budget.

June’s public deficit fell to £5.4bn from £6.2bn public sector net borrowing a year before, excluding stakes in banks, while the previous two months were also revised down.

The deficit fell as borrowing for the first three months of the financial year hit £16.8bn, the Office for National Statistics revealed, down 24.4% from £22.2bn at the end of June last year and the lowest deficit since 2007.

State finances benefited in June from a 3.1% year-on-year fall in government spending, while there was a 1.3% fall in debt interest payments and debt interest payments were down 13% year-on-year over the three months to June.

Looking a bit further ahead, this weekend will see a G20 finance ministers meeting in Buenos Aires, where US Treasury Secretary Steve Mnuchin will be able to respond to questions on US trade policy. Currently there are no bi-lateral meetings planned with Chinese officials to move things forward on trade.

In company news, insurer Beazley tumbled after reporting lower first-half profits as it paid out more for claims and investment returns declined but top-line growth was strong as rates firmed.

EasyJet flew lower after saying it is still interested in Italy's Alitalia after Italy's transport minister said the airline will remain the national flag carrier but needed an operational partner, according to a report in the Corriere della Sera.

Experian ended flat after the Competition & Markets Authority gave the company a week to propose measures to ensure its takeover of ClearScore does not harm consumers or face a full competition inquiry. The CMA said the companies were the leaders in credit checking services and each other’s main competitor.

Premier Oil was lower after analysts at Investec downgraded its rating to 'hold' with a target price of 130p, while Nostrum Oil & Gas was up after Panmure Gordon raised its recommendation to 'buy'.

HomeServe gained as the emergency home repairs group said trading has been as expected during its traditionally quieter first quarter.

Unilever rose as it confirmed the successful completion of the first half of its €6bn share buyback programme and said it would start the second on Friday, as it returns value to shareholders following the disposal of its Spreads business. It also benefited from a number of target price upgrades from the likes of Barclays, Jefferies and Berenberg following its results on Thursday.

Market Movers

FTSE 100 (UKX) 7,678.79 -0.07%
FTSE 250 (MCX) 20,925.68 0.09%
techMARK (TASX) 3,593.07 -0.06%

FTSE 100 - Risers

Smith (DS) (SMDS) 506.00p 3.03%
British American Tobacco (BATS) 3,960.00p 2.54%
Ocado Group (OCDO) 1,083.00p 2.41%
GVC Holdings (GVC) 1,098.00p 1.67%
Fresnillo (FRES) 1,123.00p 1.31%
Intertek Group (ITRK) 5,994.00p 1.28%
WPP (WPP) 1,155.00p 1.23%
Reckitt Benckiser Group (RB.) 6,507.00p 0.98%
Diageo (DGE) 2,883.50p 0.96%
Paddy Power Betfair (PPB) 8,375.00p 0.90%

FTSE 100 - Fallers

Rentokil Initial (RTO) 339.40p -1.88%
Just Eat (JE.) 863.00p -1.71%
easyJet (EZJ) 1,615.00p -1.64%
Glencore (GLEN) 311.65p -1.61%
CRH (CRH) 2,672.00p -1.58%
Shire Plc (SHP) 4,375.50p -1.55%
BHP Billiton (BLT) 1,613.40p -1.49%
Admiral Group (ADM) 1,958.00p -1.39%
Melrose Industries (MRO) 215.40p -1.37%
Anglo American (AAL) 1,599.80p -1.37%

FTSE 250 - Risers

AA (AA.) 113.30p 5.05%
Hikma Pharmaceuticals (HIK) 1,614.50p 4.30%
Hochschild Mining (HOC) 186.60p 4.25%
FirstGroup (FGP) 91.35p 3.05%
Sports Direct International (SPD) 416.60p 2.86%
Homeserve (HSV) 996.00p 2.68%
Playtech (PTEC) 534.80p 2.65%
Dunelm Group (DNLM) 517.00p 2.38%
Aggreko (AGK) 716.00p 2.29%
Energean Oil & Gas (ENOG) 551.00p 2.23%

FTSE 250 - Fallers

Just Group (JUST) 121.60p -5.59%
Euromoney Institutional Investor (ERM) 1,340.00p -5.23%
Hays (HAS) 196.30p -4.34%
Moneysupermarket.com Group (MONY) 315.00p -4.08%
Indivior (INDV) 335.40p -3.29%
Thomas Cook Group (TCG) 95.30p -2.80%
Equiniti Group (EQN) 210.00p -2.78%
Clarkson (CKN) 2,385.00p -2.45%
Premier Oil (PMO) 120.60p -2.43%
Man Group (EMG) 175.35p -2.07%