London open: Stocks fall on weak US and Asian cues

London stocks fell in early trade, taking their cue from a selloff on Wall Street that saw the S&P 500 close at a 14-month low amid worries about economic growth.

At 0830 GMT, the FTSE 100 was down 0.7% to 6,729.23, while the pound was up 0.3% against the dollar at 1.2655 and 0.1% firmer versus the euro at 1.1138.

Stocks in Asia also suffered heavy losses after a speech by Chinese President Xi Jinping failed to boost sentiment. In an address to commemorate the 40th anniversary of China's economic reforms, Xi called for China to "stay the course" on its current path of reform and said "no one is in a position to dictate to the Chinese people what should or should not be done."

Market participants were left disappointed after Xi failed to mention any new reforms or stimulus in the speech.

On home turf, Brexit was very much in focus as Prime Minister Theresa May confirmed that the Commons vote on her deal will take place in the week starting 14 January. Meanwhile, Cabinet was set to discuss whether the government should ramp up no-deal Brexit preparations when it meets later on Tuesday.

On Monday, Labour leader Jeremy Corbyn tabled a motion of no confidence in May, but Downing Street said the motion will not be granted parliamentary time for debate, dismissing it as a "stunt".

Wednesday's policy announcement by the Federal Reserve is also a highlight this week. London Capital Group analyst Jasper Lawler said: "The market’s overriding fear is that the Fed will press ahead with plans to raise interest rates, which could be too much for the US economy to handle. An indication from the Fed that they will slow their pace of hikes could calm these jittery markets.

"However, until the Fed have confirmed that as a course of action, investors will remain skittish. The volatility index, also known as the fear gauge lifted 2.27 points to a seven-week high."

On the corporate front, National Grid was the standout loser on the FTSE 100 as it said it was "disappointed" with Ofgem's proposed financial package, which will see "smarter, fairer and cleaner" reforms to the energy market that could save consumers £45 a year. The proposal includes price controls on National Grid.

Shire was in doldrums following heavy falls for Takeda overnight, after Moody's cut its credit rating on the pharmaceutical company by three notches to Baa2 from A2.

Royal Dutch Shell gushed lower following a report that the oil giant is in talks to buy Endeavor Energy Resources for about $8bn. Bloomberg cited a person familiar with the matter as saying that discussions have not reached an advanced stage, with matters complicated by founder Autry Stephens' desire to retain a large quantity of its mineral rights.

More broadly, energy-related shares took a hit, with BP, Premier Oil and Tullow Oil all lower as oil prices slid. West Texas Intermediate was down 1.8% to $48.99 a barrel and Brent crude was 1.7% weaker at $58.61 amid supply glut worries.

Wood Group was in the red despite winning a 10-year contract worth $66m to supply programmable digital control technologies to the Sellafield nuclear site in Cumbria, UK.

Residential landlord Grainger retreated as it agreed to forward-fund and acquire a 373-home private rented sector development at Exchange Square in Birmingham for around £77m.

As investors looked for somewhere safe to park their cash, precious metals miners Fresnillo and Randgold Resources were the top performers.

Oil services engineer Petrofac bucked the trend after saying it was trading in line with expectations for the calendar year. New order intake has grown to $5.0bn so far in 2018, up from $3.3bn at the half-year stage.

In broker note action, Asos was cut to 'hold' from 'sell' at Liberum and to 'sell' from 'hold' at Stifel following its shock profit warning on Monday, while Cineworld was lifted to 'top pick' from 'outperform' by RBC Capital Markets.

British American Tobacco and Cairn Energy were started at 'overweight' by Barclays, along with Premier Oil and Tullow, while Faroe Petroleum was initiated at 'equalweight'.

Elsewhere, IG Group, Euromoney and CMC Markets were started at 'buy' by Peel Hunt, while Plus500 was initiated at 'hold'.

Market Movers

FTSE 100 (UKX) 6,729.23 -0.65%
FTSE 250 (MCX) 17,353.61 -0.36%
techMARK (TASX) 3,300.55 -0.55%

FTSE 100 - Risers

Fresnillo (FRES) 833.20p 1.73%
Randgold Resources Ltd. (RRS) 6,780.00p 1.59%
BT Group (BT.A) 253.95p 1.56%
Marks & Spencer Group (MKS) 254.10p 1.11%
easyJet (EZJ) 1,063.00p 1.09%
Compass Group (CPG) 1,676.00p 0.75%
Tesco (TSCO) 191.50p 0.66%
Kingfisher (KGF) 217.20p 0.56%
International Consolidated Airlines Group SA (CDI) (IAG) 600.00p 0.44%
Taylor Wimpey (TW.) 131.55p 0.42%

FTSE 100 - Fallers

National Grid (NG.) 810.00p -3.03%
Shire Plc (SHP) 4,396.20p -3.01%
Rightmove (RMV) 423.00p -2.31%
Scottish Mortgage Inv Trust (SMT) 469.20p -2.19%
Antofagasta (ANTO) 780.40p -1.96%
Micro Focus International (MCRO) 1,382.50p -1.81%
Just Eat (JE.) 569.00p -1.73%
Royal Dutch Shell 'B' (RDSB) 2,299.50p -1.69%
Wood Group (John) (WG.) 525.20p -1.65%
Royal Dutch Shell 'A' (RDSA) 2,285.00p -1.59%

FTSE 250 - Risers

CYBG (CYBG) 189.80p 4.34%
Keller Group (KLR) 510.00p 2.00%
Coats Group (COA) 78.00p 1.96%
Vivo Energy (VVO) 116.60p 1.64%
Petrofac Ltd. (PFC) 451.68p 1.32%
Galliford Try (GFRD) 576.50p 1.32%
Dunelm Group (DNLM) 488.60p 1.20%
Assura (AGR) 53.99p 1.10%
Mediclinic International (MDC) 315.00p 1.06%
Bellway (BWY) 2,472.83p 1.06%

FTSE 250 - Fallers

Premier Oil (PMO) 61.62p -5.20%
Kaz Minerals (KAZ) 512.40p -2.95%
Tullow Oil (TLW) 169.80p -2.78%
Spectris (SXS) 2,153.00p -2.58%
Hunting (HTG) 475.60p -2.54%
Cairn Energy (CNE) 146.10p -2.34%
Provident Financial (PFG) 588.00p -2.20%
Brewin Dolphin Holdings (BRW) 309.60p -2.15%
JPMorgan American Inv Trust (JAM) 410.73p -1.97%
Worldwide Healthcare Trust (WWH) 2,505.00p -1.96%