London midday: Stocks extend losses amid China-US spat

London stocks had extended losses by midday on Wednesday amid growing tensions between the US and China and reports the UK is close to giving up on a Brexit trade deal.

The FTSE 100 was down 1.1% at 6,202.69, while sterling was off 0.4% against the dollar at 1.2683 after The Telegraph said the government is now working on the premise that current trade talks between the UK and EU, which started on Monday and are scheduled to end on Thursday, will not result in a deal.

If the two sides cannot agree terms, the UK will have to trade with the EU under WTO terms when the transition period ends on 31 December. According to The Telegraph, the negotiations have become deadlocked on various core areas, including fishing rights and the role of the European Court of Justice.

Souring relations between the US and China also weighed on sentiment after the State Department ordered the closure of the Chinese consulate in the Texas city of Houston.

"Tensions between the US and China have been brewing recently in relation to Hong Kong, and this could be the next chapter of the frosty relations between the two countries," said CMC Markets analyst David Madden.

Worries about a rise in new coronavirus cases in the US also dented the mood after President Donald Trump conceded that the pandemic may get worse before it gets better.

Spreadex analyst Connor Campbell said: "It appears that Trump’s pivot towards the presidential in an attempt to boost his plummeting approval ratings - urging Americans to wear face masks during a relatively sombre first daily covid-19 press conference since April - has worried investors. After all, if Trump has now dropped his long-held stance that everything is OK, then it is probably time to really be concerned."

In equity markets, engineering company Melrose Industries was the worst performer on the FTSE 100. It warned of potential job losses as it looked to cut costs after second quarter sales slumped during the Covid-19 lockdowns.

Melrose said revenue fell 27% after a "steep decline" in the second quarter as lockdowns shuttered its factories. However, there was a rebound in June as measures were eased and adjusted operating profits were breakeven and Melrose said it expected to post a small first-half operating profit.

Property developer St Modwen was in the red after saying it swung to a first-half loss and cutting its dividend following a writedown in asset valuations on sites in Wales.

On the upside, precious metals miners Fresnillo, Polymetal and Hochschild were all firmly higher after gold prices hit a nine-year high.

DIY group Kingfisher rallied after saying it expects interim pre-tax profits to be higher than the previous year as strong demand continued across its markets after the lifting of lockdowns, but withheld guidance due to continued uncertainty.

Computacenter surged as it said adjusted first-half pre-tax profit has turned out to be "substantially ahead" of the same period last year.

Market Movers

FTSE 100 (UKX) 6,202.69 -1.07%
FTSE 250 (MCX) 17,400.04 -0.58%
techMARK (TASX) 3,821.71 -0.63%

FTSE 100 - Risers

Kingfisher (KGF) 250.20p 11.15%
Fresnillo (FRES) 1,167.50p 9.21%
Polymetal International (POLY) 1,725.00p 3.48%
DCC (DCC) 7,100.00p 2.10%
Smurfit Kappa Group (SKG) 2,496.00p 1.55%
Auto Trader Group (AUTO) 548.40p 1.48%
Aveva Group (AVV) 4,211.00p 1.13%
Avast (AVST) 583.00p 1.04%
Pennon Group (PNN) 1,094.50p 1.02%
British Land Company (BLND) 373.40p 0.67%

FTSE 100 - Fallers

Melrose Industries (MRO) 95.50p -20.71%
Rolls-Royce Holdings (RR.) 273.90p -4.10%
Whitbread (WTB) 2,273.00p -3.89%
Burberry Group (BRBY) 1,373.50p -3.85%
BAE Systems (BA.) 480.00p -3.11%
International Consolidated Airlines Group SA (CDI) (IAG) 210.50p -3.08%
Smiths Group (SMIN) 1,435.50p -2.88%
Informa (INF) 423.10p -2.85%
Associated British Foods (ABF) 1,867.50p -2.81%
HSBC Holdings (HSBA) 370.40p -2.77%

FTSE 250 - Risers

Computacenter (CCC) 1,940.00p 11.75%
Mediclinic International (MDC) 278.40p 9.61%
PayPoint (PAY) 607.00p 7.62%
Hochschild Mining (HOC) 266.20p 4.31%
Spirent Communications (SPT) 261.00p 2.76%
Liontrust Asset Management (LIO) 1,325.00p 2.71%
Centamin (DI) (CEY) 197.15p 2.71%
IP Group (IPO) 68.90p 2.07%
Apax Global Alpha Limited (APAX) 143.60p 1.84%
Watches of Switzerland Group (WOSG) 286.00p 1.78%

FTSE 250 - Fallers

Hammerson (HMSO) 72.18p -7.86%
St. Modwen Properties (SMP) 335.00p -5.50%
Capita (CPI) 38.50p -5.38%
Meggitt (MGGT) 295.90p -5.22%
TI Fluid Systems (TIFS) 184.00p -4.66%
SSP Group (SSPG) 242.20p -4.65%
WH Smith (SMWH) 1,003.00p -4.57%
Energean (ENOG) 568.00p -4.54%
Cineworld Group (CINE) 54.06p -4.11%
Frasers Group (FRAS) 275.40p -3.97%