London close: Stocks slip despite US dollar strength

London stocks finished on a mixed note on Thursday, with equity investors reluctant to make any big bets either way as they mulled the possibility of no-deal Brexit and given the uncertainty around the US-China trade talks that were then under way.

The FTSE 100 drifted 0.15% or 11.02 points lower to 7,563.22, despite a sharp slide lower in the value of the pound against the dollar, with Sterling retreating 0.7% to 1.28201 against the Greenback while against the euro it was 0.39% weaker to 1.1092.

"Trade fears were re-kindled today as the 2nd wave of US/China trade tariffs comes into force, with no sign any meaningful progress in talks/negotiations. The [US central bank policy meeting] minutes released last night suggested that further US rate rises are in the pipeline if the economy remains on track. This lifted the USD, putting further pressure on USD priced commodities," traders at Sucden Financial explained.

Over on the second-tier index on the other hand, stocks were higher with the FTSE 250 adding 0.11% or 22.97 points to end at 20,665.47.

Triggering Thursday's decline in the pound were typically hawkish remarks from a top US central bank official, Esther George, who said she backed two more interest rate hikes in 2018, with a so-called 'neutral rate' likely lying between 2.5% and 3.0%.

Her remarks came as investors were still digesting the latest FOMC minutes released on Wednesday night in the US, which suggested that the Federal Reserve is likely to hike interest rates again next month and possibly in December as well.

Against that backdrop, Britain's messy divorce from the EU was firmly in focus as Brexit secretary Dominic Raab outlined the government's preparations for a possible 'no-deal' Brexit.

Shortly before he noon he had detailed a host of legal and technical hurdles that companies would face under such a scenario, explaining that the UK had to plan for a no-deal Brexit in case the EU failed to compromise.

Nevertheless, Raab said: "I remain confident a good deal is within our sights, and that remains our top, and overriding, priority. If the EU responds with the level of ambition and pragmatism, we will strike a strong deal that benefits both sides."

Trade tensions were still very much on investors' minds too, as the US and China implemented their previously announced 25% tariffs on additional $16bn-worth of each other's goods overnight, even as negotiating teams from both sides were meeting in Washington.

Meanwhile, Trump was making the headlines yet again after he said in an interview with Fox & Friends that payments to two women alleging to have had affairs with him were not a campaign violation as they came from him personally, not the campaign. The comments came after his former lawyer, Michael Cohen, pleaded guilty to eight charges including campaign finance violations on Tuesday. Cohen said the payments had reportedly been made at the direction of Trump in order to influence the election.

Back in the UK, the latest survey from the Confederation of British Industry showed that retail sales unexpectedly rose in August, with shoppers hitting the high street as they made the most of the heatwave, but the outlook was less positive.

The CBI's quarterly distributive trades survey found that 51% of respondents reported a rise in sales volumes compared to a year ago, while 21% said they were down, giving a balance of 29%. This was up from +20% the month before and ahead of expectations for a drop to +13%.

The outlook was gloomier, however, with declines in employment, investment intentions and business optimism.

In corporate news, CRH edged lower after it reported a 5% increase in first-half profit as the building materials group benefited from recovering construction markets.

Playtech surged after it reported a drop in interim earnings but a rise in revenue as the gaming and casino software maker said Asian markets were increasingly competitive.

John Laing was also in the green as the infrastructure investor said first-half profit and net asset value increased, while Southend airport owner Stobart Group pushed up as it made a series of new board appointments.

Premier Oil gushed higher after well-received first-half numbers, while Phoenix Group gained as its first-half operating profit beat expectations.

TalkTalk racked up strong gains after an upgrade to 'overweight' at Barclays.

AstraZeneca slipped as it said a clinical trial of its Bevespi Aerosphere drug combination for lung disease showed that it is not superior to an existing inhaler treatment.

OneSavings Bank lost ground even as it upped its loan growth forecast and posted a jump in first-half profit, as it warned that competition is weighing on profit margins.

Meanwhile, ex-dividends took 4.26 points off the FTSE 100 and 22.37 points off the 250. These included Berkeley Group, Carnival, Croda International, Imperial Brands, LSE, Mondi, Paddy Power Betfair, Prudential, RBS, CLS Holdings, Dixons Carphone, FDM Group, Ferrexpo, HICL Infrastructure, Hikma Pharmaceuticals, Jardine Lloyd Thompson, Quilter, Rotork and Stagecoach.

Market Movers

FTSE 100 (UKX) 7,563.22 -0.15%
FTSE 250 (MCX) 20,665.47 0.11%
techMARK (TASX) 3,540.66 -0.33%

FTSE 100 - Risers

Evraz (EVR) 487.80p 1.62%
GVC Holdings (GVC) 1,107.00p 1.56%
Melrose Industries (MRO) 226.30p 1.43%
Ocado Group (OCDO) 1,114.50p 1.32%
Smith (DS) (SMDS) 510.60p 1.27%
Ferguson (FERG) 6,129.00p 1.19%
Marks & Spencer Group (MKS) 305.30p 1.13%
Rightmove (RMV) 4,917.00p 1.07%
Associated British Foods (ABF) 2,365.00p 1.07%
Smurfit Kappa Group (SKG) 3,266.00p 1.05%

FTSE 100 - Fallers

NMC Health (NMC) 3,800.00p -2.76%
Imperial Brands (IMB) 2,844.50p -2.70%
Anglo American (AAL) 1,536.00p -2.58%
Fresnillo (FRES) 924.20p -2.39%
Antofagasta (ANTO) 805.00p -1.40%
Severn Trent (SVT) 1,956.50p -1.21%
Carnival (CCL) 4,626.00p -1.13%
Prudential (PRU) 1,731.00p -1.11%
Barclays (BARC) 183.14p -1.11%
Mondi (MNDI) 2,125.00p -1.07%

FTSE 250 - Risers

TalkTalk Telecom Group (TALK) 134.00p 8.41%
John Laing Group (JLG) 312.60p 6.62%
Dunelm Group (DNLM) 515.50p 3.64%
Syncona Limited NPV (SYNC) 269.00p 3.26%
Petrofac Ltd. (PFC) 657.20p 3.04%
Contour Global (GLO) 231.40p 3.03%
Charter Court Financial Services Group (CCFS) 347.60p 2.90%
Sophos Group (SOPH) 510.50p 2.76%
NewRiver REIT (NRR) 264.00p 2.52%
Diploma (DPLM) 1,358.00p 2.26%

FTSE 250 - Fallers

Quilter (QLT) 139.76p -8.65%
OneSavings Bank (OSB) 416.00p -6.14%
Kaz Minerals (KAZ) 450.00p -5.06%
SIG (SHI) 126.60p -3.43%
Marshalls (MSLH) 461.20p -3.11%
Bakkavor Group (BAKK) 184.20p -2.85%
Grafton Group Units (GFTU) 772.00p -2.83%
Hochschild Mining (HOC) 175.55p -2.74%
Travis Perkins (TPK) 1,130.00p -2.38%
Ferrexpo (FXPO) 152.95p -2.33%