London open: Stocks drop amid growing trade war fears; miners weigh

London stocks fell in early trade on Monday, led lower by the mining sector amid growing trade war concerns.

At 0840 BST, the FTSE 100 was down 1.2% to 7,547.58, while the pound was up 0.1% against the euro at 1.1316 and 0.3% lower versus the dollar at 1.3168.

Worries about a trade war escalated after US President Trump said over the weekend that the European Union was "as bad as China" when it comes to trade.

Asked whether it would be better to join forces with Washington’s European allies to try to change China’s trade practices in an interview with Fox News, Trump said: "No... they treat us badly, they treat us very unfairly."

"The EU is possibly as bad as China, just smaller. It is terrible what they do to us," he said.

Spreadex analyst Connor Campbell said: "This has sent the President’s previous threat of tariffs on EU car imports back to the top of investors’ ‘To Fear’ lists."

Mining stocks were the worst performers, with Anglo American, Glencore, BHP Billiton and Antofagasta all lower after data showed that growth in China's manufacturing sector slowed in June. The Caixin-Markit China manufacturing purchasing managers' index nudged down to 51 this month from 51.1 in May, in line with expectations.

On the UK data front, Markit’s manufacturing PMI for June at 0930 BST is expected to have dipped to 54 from 54.4 in May.

In corporate news, Tesco slipped even as it agreed to form an alliance with French supermarket peer Carrefour to group their buying power together to squeeze prices even lower. Initially agreed as a three-year partnership, the alliance will cover the "strategic relationship" with global suppliers, the joint purchasing of own brand products and goods not for resale.

AstraZeneca fell despite announcing that it has received rapid regulatory approval for new uses of two of its important cancer drugs in Japan, while gambling software and development company Playtech was sharply lower after a profit warning.

Micro Focus rose after agreeing to sell its SUSE software business to Blitz 18-679, a subsidiary of Swedish private equity group EQT, for $2.5bn in cash.

Engineer Meggitt was in the green after upping its revenue guidance for the year following a stronger-than-expected second quarter and announcing a divisional restructure.

LondonMetric ticked up after agreeing to sell two M&S convenience stores for £10.7m.

Vedanta surged after the company’s directors indicated that they would be prepared to recommend a possible £778m all-cash takeover offer from founder Anil Agarwal, which comes amid a share slump after several protestors were killed by police at protests against the expansion of the company's Tuticorin copper smelter in India.

In broker note action, Premier Inn and Costa owner Whitbread was upgraded to ‘market perform’ at Bernstein.

Market Movers

FTSE 100 (UKX) 7,547.58 -1.17%
FTSE 250 (MCX) 20,661.10 -0.82%
techMARK (TASX) 3,509.97 -0.35%

FTSE 100 - Risers

Micro Focus International (MCRO) 1,373.50p 3.78%
Ocado Group (OCDO) 1,034.00p 0.63%
Associated British Foods (ABF) 2,743.00p 0.18%
Whitbread (WTB) 3,962.00p 0.08%
Reckitt Benckiser Group (RB.) 6,233.00p -0.10%
Centrica (CNA) 157.25p -0.25%
Paddy Power Betfair (PPB) 8,275.00p -0.30%
Compass Group (CPG) 1,613.50p -0.31%
BT Group (BT.A) 217.10p -0.32%
Burberry Group (BRBY) 2,153.00p -0.32%

FTSE 100 - Fallers

Anglo American (AAL) 1,640.20p -3.22%
Glencore (GLEN) 351.00p -3.04%
BHP Billiton (BLT) 1,655.00p -2.99%
Antofagasta (ANTO) 961.20p -2.91%
Rio Tinto (RIO) 4,090.00p -2.64%
Smurfit Kappa Group (SKG) 2,993.92p -2.35%
Evraz (EVR) 496.70p -2.30%
Just Eat (JE.) 763.40p -2.00%
Barratt Developments (BDEV) 505.40p -1.94%
Standard Chartered (STAN) 679.50p -1.89%

FTSE 250 - Risers

Vedanta Resources (VED) 816.00p 26.16%
Meggitt (MGGT) 508.25p 3.03%
IP Group (IPO) 128.47p 1.32%
CYBG (CYBG) 321.40p 1.20%
Renewi (RWI) 78.79p 1.01%
Euromoney Institutional Investor (ERM) 1,354.00p 0.89%
GCP Infrastructure Investments Ltd (GCP) 120.86p 0.88%
Cairn Energy (CNE) 252.00p 0.80%
UK Commercial Property Reit Limited (UKCM) 88.68p 0.77%
Virgin Money Holdings (UK) (VM.) 369.60p 0.74%

FTSE 250 - Fallers

Playtech (PTEC) 588.60p -21.83%
Contour Global (GLO) 228.00p -3.39%
Kaz Minerals (KAZ) 814.80p -3.35%
Aggreko (AGK) 656.60p -2.87%
Tullow Oil (TLW) 238.75p -2.55%
Kier Group (KIE) 938.26p -2.26%
Equiniti Group (EQN) 241.50p -2.23%
Weir Group (WEIR) 1,958.00p -2.10%
Indivior (INDV) 375.30p -2.06%
Baillie Gifford Japan Trust (BGFD) 830.00p -2.01%