London midday: Stocks turn lower as trade war fears resurface

London stocks had fallen into the red by midday on Friday, with jitters setting in as relations between the US and China escalated again.

The FTSE 100 was down 0.8% to 7,707.61, having kicked off the session marginally higher, with sentiment undermined after China vowed to retaliate quickly following news that US President Trump has approved $50bn worth of tariffs on the import of goods from China.

The approval followed a 90-minute meeting on Thursday of Senior White House officials, national-security officials and senior representatives of the Treasury, Commerce Department, and US Trade Representative’s Office.

A formal announcement is expected to be made later in the day by the US Trade Representatives, with a notification in the Federal Register in the coming week.

Investors initially took the news in their stride but the mood changed after Chinese Foreign Ministry spokesman Geng Shuang said: "If the United States takes unilateral, protectionist measures, harming China's interests, we will quickly react and take necessary steps to resolutely protect our fair, legitimate rights."

IG analyst Joshua Mahony said: "Trump is clearly used to getting things his own way, yet with his decision to fight on all fronts on trade, we are essentially seeing him bet the house on the notion that the likes of China, the EU and Canada will eventually cave in to his demands."

On the corporate front, bookmakers were in focus following a report that the new £2m maximum stake on fix-odds betting machines will not be implemented until April 2020 after the Treasury struck a backroom deal with bookmakers. According to The Times, bookies have convinced the Treasury - which has always been worries about the hit to tax receipts from a lower stake - that they need more time to reprogram the terminals.

Rolls-Royce was the standout gainer after saying it should exceed its target of £1bn of free cash flow by 2020 following its announcement a day earlier that it was cutting 4,600 jobs.

Tesco was also on the front foot after saying it saw UK and Irish sales slow in the first quarter of its new financial year but with wholesale acquisition Booker bedding down, group-wide growth accelerated and beat consensus forecasts.

Building materials group CRH edged up as it received regulatory approval for its $3.5bn acquisition of Kansas-based cement manufacturer Ash Grove.

Glencore advanced after it settled a dispute between its Mutanda Mining Sarl and Kamoto Copper Company SA subsidiaries and companies affiliated with mining magnate Dan Gertler in Congo.

Pub group Marston’s fizzed higher as Shore Capital said in a note that an all-share merger, especially with a comparable drinks business, "arguably provides the best solution to addressing the issues". The brokerage said it sees "significant value" in a tie-up with Magners owner C&C, for example.

Specialist information company Ascential ticked down after announcing the acquisition of global digital subscription business WARC for up to £24m.

Stobart Group, the owner of Southend Airport, retreated as it wrote to its shareholders to urge them to back chairman Iain Ferguson, after it sacked director and former chief executive Andrew Tinkler on Thursday for trying to oust him.

Indivior tumbled as its main revenue-generating product, Suboxone film, came under pressure overnight as rival Dr Reddy’s Labs won regulatory approval to its generic version of the sublingual film.

BTG was also weaker after an advisory committee told US regulators to reject a pre-market approval application its severe emphysema treatment.

In broker note action, British Airways parent IAG was downgraded to ‘neutral’ by MainFirst, while InterContinental was lifted to ‘neutral’ at JPMorgan.

Market Movers

FTSE 100 (UKX) 7,707.61 -0.75%
FTSE 250 (MCX) 21,170.75 -0.72%
techMARK (TASX) 3,577.29 -0.72%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 956.80p 8.38%
Tesco (TSCO) 254.40p 1.84%
Relx plc (REL) 1,629.00p 1.21%
Unilever (ULVR) 4,082.00p 1.20%
Coca-Cola HBC AG (CDI) (CCH) 2,661.00p 1.18%
Diageo (DGE) 2,805.50p 1.15%
Informa (INF) 842.00p 0.89%
Smurfit Kappa Group (SKG) 3,076.00p 0.79%
Smith & Nephew (SN.) 1,371.50p 0.66%
Imperial Brands (IMB) 2,622.00p 0.54%

FTSE 100 - Fallers

Old Mutual (OML) 218.80p -3.57%
Mediclinic International (MDC) 547.80p -2.91%
Barclays (BARC) 194.90p -2.84%
Royal Bank of Scotland Group (RBS) 257.10p -2.47%
Hargreaves Lansdown (HL.) 2,040.00p -2.30%
Randgold Resources Ltd. (RRS) 5,824.00p -2.02%
Legal & General Group (LGEN) 267.70p -2.01%
Standard Chartered (STAN) 716.70p -1.94%
Schroders (SDR) 3,213.00p -1.92%
Lloyds Banking Group (LLOY) 61.93p -1.90%

FTSE 250 - Risers

Synthomer (SYNT) 557.50p 2.86%
Marston's (MARS) 101.40p 2.63%
Greencore Group (GNC) 181.15p 2.37%
Caledonia Investments (CLDN) 2,856.57p 2.20%
Workspace Group (WKP) 1,151.00p 2.13%
Sophos Group (SOPH) 613.00p 1.83%
Dechra Pharmaceuticals (DPH) 2,844.00p 1.72%
TI Fluid Systems (TIFS) 280.00p 1.45%
Superdry (SDRY) 1,182.00p 1.11%
Travis Perkins (TPK) 1,447.00p 1.08%

FTSE 250 - Fallers

Indivior (INDV) 399.80p -19.15%
Playtech (PTEC) 768.00p -5.30%
Alfa Financial Software Holdings (ALFA) 190.40p -4.80%
Stobart Group Ltd. (STOB) 254.00p -4.69%
McCarthy & Stone (MCS) 128.30p -4.61%
BTG (BTG) 519.50p -4.15%
Thomas Cook Group (TCG) 111.90p -4.11%
Ferrexpo (FXPO) 212.50p -4.02%
Genus (GNS) 2,559.00p -3.43%
Dunelm Group (DNLM) 550.50p -3.00%