London midday: Stocks slip into the red as US threatens more Turkey sanctions

London stocks had slipped into the red by midday on Friday as investors weighed up the latest developments in Sino-US relations and Washington's threat of more economic sanctions on Turkey.

The FTSE 100 was down 0.1% at 7,549.89, while the pound was off 0.1% against the greenback at 1.2705 and 0.2% lower versus the euro at 1.1162.

White House economic advisor Larry Kudlow confirmed overnight that the US and China will resume trade talks later this month, but he also cautioned that President Trump is committed to making sure the administration gets a good deal.

"The Chinese government, in its totality, must not underestimate President Trump's toughness and willingness to continue this battle to eliminate tariffs and non-tariff barriers and quotas, to stop the theft of intellectual property and to stop the forced transfer of technology," Kudlow said in an interview with CNBC. "Those are the asks that we've been making now for quite some time."

Investors were also likely to be feeling a little wary after US Treasury Secretary Mnuchin signalled a more hard-line approach to Turkey, saying that the US could impose more sanctions on the country if President Erdogan refuses the quick release of the American pastor at the heart of the Turkey crisis.

"We put sanctions on several of the Cabinet members," Mnuchin said Thursday during a Cabinet meeting at the White House. "We have more that we’re planning to do if they don’t release him quickly."

CMC Markets analyst Michael Hewson said: "The US doesn’t appear in any mood to relieve the pressure on the Turkish government in securing the release of their pastor, if recent comments from vice President Mike Pence, and Treasury secretary Steve Mnuchin are any guide.

"President Erdogan may be able to defray some of the risks to the Turkish economy by trying to improving his ties with Germany and Russia, but if the US really wanted to turn the screws it’s unlikely that these countries would be able to do much about it."

Things were pretty quiet on the UK corporate front, with defensive stocks leading the blue chip gains.

Royal Bank of Scotland nudged lower as it confirmed that chief financial officer Ewen Stevenson will step down from the board on 30 September, after he resigned in May. Katie Murray, his current deputy CFO, will become interim CFO while Stevenson's permanent successor is sought.

TI Fluids Systems was little changed after announcing a 2.7p a share dividend to be paid on 28 September.

Outside the FTSE 350, Interserve rallied as a consortium led by the support services and construction group won a £105m project for Durham University.

Waste management company Biffa also racked up healthy gains as it announced the acquisition of waste and recycling solutions group Weir Waste Services for £16.2m.

On the broker note front, RBS was upgraded to 'buy' at HSBC, while Esure was lifted to 'equalweight' at Barclays and Glencore was boosted to 'hold' at Liberum.

On the downside, Kaz Minerals tumbled after a downgrade to 'neutral' at Credit Suisse and Spirax-Sarco was downgraded to 'sell' at Investec.

Market Movers

FTSE 100 (UKX) 7,549.89 -0.09%
FTSE 250 (MCX) 20,405.55 -0.28%
techMARK (TASX) 3,538.76 -0.22%

FTSE 100 - Risers

Just Eat (JE.) 787.60p 1.05%
RSA Insurance Group (RSA) 635.80p 0.79%
British American Tobacco (BATS) 4,189.00p 0.75%
CRH (CRH) 2,560.00p 0.71%
Evraz (EVR) 464.10p 0.61%
Tesco (TSCO) 257.55p 0.53%
Paddy Power Betfair (PPB) 6,955.00p 0.51%
InterContinental Hotels Group (IHG) 4,751.10p 0.47%
Unilever (ULVR) 4,430.50p 0.44%
Hargreaves Lansdown (HL.) 2,162.00p 0.42%

FTSE 100 - Fallers

Micro Focus International (MCRO) 1,217.50p -2.05%
Taylor Wimpey (TW.) 166.95p -1.94%
Persimmon (PSN) 2,423.00p -1.86%
Barratt Developments (BDEV) 527.89p -1.77%
Kingfisher (KGF) 269.70p -1.75%
Randgold Resources Ltd. (RRS) 4,958.00p -1.47%
Antofagasta (ANTO) 832.20p -1.35%
Standard Chartered (STAN) 643.60p -1.15%
Berkeley Group Holdings (The) (BKG) 3,675.00p -1.13%
Johnson Matthey (JMAT) 3,560.00p -1.11%

FTSE 250 - Risers

Fisher (James) & Sons (FSJ) 1,840.00p 4.07%
Contour Global (GLO) 246.00p 3.19%
Syncona Limited NPV (SYNC) 288.79p 2.77%
Stobart Group Ltd. (STOB) 233.26p 2.30%
Hikma Pharmaceuticals (HIK) 1,811.00p 2.03%
Barr (A.G.) (BAG) 682.00p 1.79%
Clarkson (CKN) 2,650.00p 1.53%
Softcat (SCT) 857.73p 1.51%
Sophos Group (SOPH) 485.20p 1.42%
Ted Baker (TED) 2,164.00p 1.31%

FTSE 250 - Fallers

Kaz Minerals (KAZ) 497.06p -11.27%
Ferrexpo (FXPO) 153.60p -4.33%
AA (AA.) 112.60p -3.43%
Centamin (DI) (CEY) 102.05p -3.13%
Rank Group (RNK) 167.00p -2.34%
Renewi (RWI) 65.10p -2.25%
Bellway (BWY) 2,815.00p -2.12%
Indivior (INDV) 276.10p -2.09%
TalkTalk Telecom Group (TALK) 115.90p -1.95%
Capita (CPI) 136.95p -1.93%