London close: Stocks retreat as trade worries flare
London stocks finished sharply lower on Tuesday as Sino-US trade tensions escalated, despite news that China would send a delegation to Washington for fresh trade talks, including the country' vice premier, Liu He.
The FTSE 100 gave back 1.63% to trade at 7,260.7, Meanwhile, sterling was 0.1% weaker versus the dollar at 1.3088 and 0.1% firmer against the euro at 1.1686.
Sentiment took a hit after US Trade Representative Robert Lighthizer confirmed overnight US President Trump's twitter threat over the weekend to raise tariffs on $200bn-worth of Chinese goods to 25% from 10% as early as Friday. Lighthizer and US Treasury Secretary Steve Mnuchin also accused China of reneging on its commitments in trade talks.
However, following a conference call on Tuesday between deputies of Liu and Lighthizer, it was decided that the Chinese official would go ahead with plans to travel to Washington.
Some analysts broached the possibility that the US administration might simply pursuing a negotiating tactic.
Mislav Matejka at JP Morgan was among them, telling clients: "We had a strong run ytd - global equities are near highs, multiples have rerated and seasonals are turning for the worse. In addition, the latest Trump tweets threaten to reignite the trade uncertainty. While the above suggest a correction is possible, we do not expect any prospective weakness to be material, or prolonged.
"[...] The latest spike in trade uncertainty might end up being no more than a short-lived negotiating tactic."
Meanwhile, in the background, later in the day, the Prime Minister was set to meet the chairman of the 1922 Committee, Sir Graham Brady, following a request for clarity on her plans to stand down, or not.
In equity markets, financials - particularly those with exposure to Asia - were among the session's standout losers, with Standard Chartered, HSBC and Prudential all moving lower.
Shares in Domino's Pizza fell as it posted a 4.5% rise in group systems sales for the first quarter but warned that it no longer expects a break-even turnout in its international business this year due to a "disappointing" performance.
Security services G4S lost ground as it confirmed that Canadian rival Garda World had not made a bid for the company but that it had received additional expressions of interest to acquire its cash solutions business, which will be evaluated alongside the separation review.
Shares in construction group Kier slumped as it announced the departure of finance director Bev Dew later this year, while Hiscox edged down as it said gross written premiums rose 3.3% in the three months to the end of March to $1.165bn.
Doorstep lender Provident Financial retreated as it reaffirmed its financial targets as it looks to fend off a hostile bid from smaller rival Non-Standard Finance.
Essentra was the biggest loser on the FTSE 250 after a rating downgrade at Stifel, while Hammerson was knocked lower by a downgrade to 'reduce' at AlphaValue.
Vodafone bucked the trend as it agreed to supply high-speed broadband to Telefonica Deutschland as it looks to address European Commission concerns about its merger with Liberty Global's cable networks in Germany and Central Europe.
Market Movers
FTSE 100 (UKX) 7,260.47 -1.63%
FTSE 250 (MCX) 19,465.69 -1.22%
techMARK (TASX) 3,570.45 -0.83%
FTSE 100 - Risers
Hikma Pharmaceuticals (HIK) 1,777.50p 1.02%
SSE (SSE) 1,156.00p 0.96%
Smith & Nephew (SN.) 1,583.50p 0.83%
InterContinental Hotels Group (IHG) 4,976.50p 0.78%
Centrica (CNA) 106.10p 0.66%
National Grid (NG.) 834.50p 0.65%
British Land Company (BLND) 598.20p 0.50%
AstraZeneca (AZN) 5,747.00p 0.38%
Next (NXT) 5,710.00p 0.18%
Diageo (DGE) 3,212.00p 0.14%
FTSE 100 - Fallers
Melrose Industries (MRO) 188.80p -5.84%
Mondi (MNDI) 1,641.50p -3.89%
Royal Dutch Shell 'B' (RDSB) 2,376.67p -3.88%
Smith (DS) (SMDS) 348.00p -3.87%
Burberry Group (BRBY) 1,917.50p -3.75%
Prudential (PRU) 1,669.50p -3.65%
Johnson Matthey (JMAT) 3,222.00p -3.59%
Ashtead Group (AHT) 2,037.00p -3.51%
RSA Insurance Group (RSA) 533.20p -3.49%
DCC (DCC) 6,612.00p -3.25%
FTSE 250 - Risers
Telecom Plus (TEP) 1,476.00p 3.51%
Greencore Group (GNC) 228.90p 2.32%
TalkTalk Telecom Group (TALK) 124.30p 1.97%
Plus500 Ltd (DI) (PLUS) 537.80p 1.40%
Saga (SAGA) 59.00p 1.29%
Polymetal International (POLY) 805.00p 1.21%
Great Portland Estates (GPOR) 763.80p 1.11%
IG Group Holdings (IGG) 511.80p 1.07%
Greene King (GNK) 614.80p 0.99%
Contour Global (GLO) 206.20p 0.98%
FTSE 250 - Fallers
Victrex plc (VCT) 2,300.00p -6.12%
Playtech (PTEC) 404.40p -5.65%
Cairn Energy (CNE) 154.80p -5.44%
Indivior (INDV) 38.88p -5.17%
Premier Oil (PMO) 88.72p -5.16%
Wood Group (John) (WG.) 438.00p -5.13%
Essentra (ESNT) 394.20p -4.88%
CYBG (CYBG) 195.65p -4.70%
Entertainment One Limited (ETO) 459.00p -4.57%
Vesuvius (VSVS) 573.50p -4.50%