London pre-open: Stocks to drop again as Sino-US trade tensions escalate

London stocks looked set to suffer more losses on Tuesday following weakness in Asia and the US, as investors grew increasingly worried about escalating trade tensions between the US and China.

The FTSE 100 was called to open 30 points lower at 7,193.

Stocks on Wall Street slumped overnight after US President Trump accused China of currency manipulation.

Ipek Ozkardeskaya, senior market analyst at London Capital Group, said: "Looking at the latest developments, it is safe to say that a trade deal between the US and China seems like a faraway dream.

"In theory, yuan depreciation is a normal response to the slowing Chinese economy and declining exports, after the US imposed tariffs on $250 billion worth of Chinese goods this far, and $300 billion worth of goods will be subject to 10% tariff from September onward.

"China will release its July trade data later this week, and the trade surplus is expected to have narrowed to $42.65 billion from $50.98 billion printed a month earlier."

She added: "One thing is sure, the falling yuan adds fuel to the fire in the White House."

In UK corporate news, interim pre-tax profits at industrial flow equipment maker Rotork fell 4.5% to £52.2m as the company said it expected to deliver flat full year sales on a constant current basis.

"Group order intake in the first half decreased 0.6% year-on-year, or -1.3% on an organic constant currency basis. Customers' spend on maintenance and upgrades remained healthy although we are still experiencing some delay in the placement of large project orders. The pattern of order intake remains uneven and the market environment uncertain," the company said.

Cairn Energy said it was selling a 10% interest in the Nova development offshore Norway to ONE-Dyas Norge for $59.5m.

The oil explorer said it would keep a participating interest of 10% in the development and reduce its capital expenditure to the end of 2021 in the Nova area by around $110m. Cairn said it would use the deal proceeds to fund group exploration and development activities.

Rolls-Royce reported interim results in line with expectations as it swung to an operating profit after improved trading in both its power systems and civil aerospace divisions, with respective underlying organic revenue growth of 11% and 6%.

Overall, the company's interim loss before tax improved from £1.2bn to £791m, despite the engineering giant having to deal with restructuring charges and costs associated with fixing blade problems in its Trent 1000 engines.