London open: Stocks fall amid Sino-US tensions; Kingfisher tumbles

London stocks fell in early trade on Wednesday amid renewed concerns about Sino-US trade relations, while uninspiring results from the likes of Kingfisher and Sage also weighed.

At 0840 GMT, the FTSE 100 was down 0.6% at 7,277.45, while the pound was off 0.2% against the dollar at 1.2904 and flat versus the euro at 1.1663.

Sentiment took a knock after US President Donald Trump said at a cabinet meeting on Tuesday that he would raise tariffs on China "even higher" if a trade deal between the two nations is not agreed.

The US Senate's passing of a bill aimed at protecting human rights in Hong Kong added to tensions. The Hong Kong Human Rights and Democracy Act will now go to the House of Representatives for approval. If signed into law, the bill will demand sanctions on Chinese and Hong Kong officials identified by the US as carrying out alleged human rights abuses.

China condemned the bill and called on the White House to block it.

Foreign Ministry spokesman Geng Shuang said: "This bill neglects facts and the truth. It applies double standards and it is overt meddling in Hong Kong's affairs and China's internal affairs. This is a serious violation of the international law and fundamental norms regulating international relations. China condemns this and speaks out against this decisively."

He added that China "will be forced to take resolute countermeasure for protecting its national sovereignty".

Han Tan, market analyst at FXTM, said: "Given that the US Senate has just passed legislation in support of the Hong Kong protests, such a move threatens to drive a wedge into ongoing US-China negotiations while potentially raising the barrier to a trade deal.

"Considering that the US and China are struggling even to agree to 'phase one', which had been deemed as more digestible, hopes for a swift conclusion to the trade conflict have clearly been misplaced. The drawn-out nature of 'phase one' only points to bigger obstacles ahead, if and when trade talks enter phase two.

"In order to maintain the current levels of risk appetite in the markets, trade talks must bear fruit soon, or investor focus will shift back to the gloomy economic data."

In equity markets, DIY group Kingfisher slumped after it reported a "disappointing" 3.2% fall in third-quarter sales in softer markets as the company's chief executive said it was suffering from "organisational complexity" that ignored customers.

Total sales fell 3.2% to £2.95bn on a constant currency basis. On a like-for-like basis the decrease was 3.7% reflecting continuing disruption from new range implementations, lower promotional activity and ongoing operational challenges in France.

Richard Hunter, head of markets at Interactive Investor, said: "The new chief executive could be forgiven for thinking that he has been handed a poisoned chalice.

"The Kingfisher transformation plan has simply not been transformative to date. The company bemoans its organisational complexity and, as is often the case in retail, competitors move on quickly, leaving groups such as Kingfisher running to stand still.

"Quite apart from the scale of the challenges specific to the group, there are also headwinds in the form of new range implementations, lower promotional activity, softer market conditions and ongoing operational challenges in France."

Aviva declined after saying it was simplifying its business into five operating divisions and selling its stake in its Hong Kong unit to joint-venture partner Hillhouse Capital.

Elsewhere, software company Sage was in the red as it posted a 9% decline in full-year pre-tax profit.

United Utilities bucked the trend as it said first-half underlying operating profit increased to £391.7m from £367.8m the year before and lifted its interim dividend by 3.2% to 14.2p a share.

All Bar One and Harvester owner Mitchells & Butlers rallied after it posted a 36.2% rise in full-year pre-tax profit as its transformation programme bears fruit.

Market Movers

FTSE 100 (UKX) 7,277.45 -0.63%
FTSE 250 (MCX) 20,436.85 -0.45%
techMARK (TASX) 4,010.17 -0.16%

FTSE 100 - Risers

United Utilities Group (UU.) 890.00p 1.46%
Halma (HLMA) 2,089.00p 1.46%
Aveva Group (AVV) 4,454.00p 1.18%
Diageo (DGE) 3,141.50p 0.74%
Smith & Nephew (SN.) 1,675.00p 0.72%
Severn Trent (SVT) 2,368.00p 0.68%
Rentokil Initial (RTO) 448.00p 0.61%
Compass Group (CPG) 2,037.00p 0.59%
Polymetal International (POLY) 1,184.50p 0.55%
AstraZeneca (AZN) 7,349.00p 0.51%

FTSE 100 - Fallers

Kingfisher (KGF) 192.95p -7.59%
Aviva (AV.) 404.80p -3.23%
Pearson (PSON) 652.00p -2.28%
NMC Health (NMC) 2,544.00p -1.93%
Morrison (Wm) Supermarkets (MRW) 196.60p -1.70%
Prudential (PRU) 1,296.50p -1.67%
Sage Group (SGE) 729.80p -1.64%
Standard Chartered (STAN) 685.40p -1.61%
Rio Tinto (RIO) 4,147.00p -1.60%
Hargreaves Lansdown (HL.) 1,788.50p -1.60%

FTSE 250 - Risers

Mitchells & Butlers (MAB) 478.50p 7.29%
Sirius Minerals (SXX) 3.58p 4.62%
Stagecoach Group (SGC) 139.10p 2.05%
AJ Bell (AJB) 412.50p 1.98%
PureTech Health (PRTC) 295.00p 1.72%
Equiniti Group (EQN) 200.00p 1.57%
Bodycote (BOY) 846.50p 1.44%
Hilton Food Group (HFG) 1,022.00p 1.39%
Big Yellow Group (BYG) 1,161.00p 1.22%
Oxford Instruments (OXIG) 1,582.00p 1.15%

FTSE 250 - Fallers

Finablr (FIN) 169.60p -4.18%
Kainos Group (KNOS) 546.00p -3.87%
Ferrexpo (FXPO) 138.15p -2.88%
Go-Ahead Group (GOG) 2,106.00p -2.59%
Inmarsat (ISAT) 542.20p -2.48%
SSP Group (SSPG) 639.00p -2.44%
Apax Global Alpha Limited (APAX) 162.00p -2.41%
Brewin Dolphin Holdings (BRW) 328.60p -2.38%
Wood Group (John) (WG.) 343.00p -2.36%
Hunting (HTG) 400.00p -2.30%