London close: Stocks sink deeper as trade optimism flounders
London stocks had sunk deeper into the red by the close on Friday, as optimism over a trade deal between the US and China continued to fade.
The FTSE 100 ended the session down 0.63% at 7,359.38, and the FTSE 250 was off 0.37% at 20,357.63.
In currencies, the pound was last 0.26% weaker against the dollar at $1.2784, but had gained 0.02% on the euro to €1.1601.
Sentiment ended rosier on Thursday, after news that the US and China had agreed to roll back tariffs as part of a 'phase one' trade deal.
Those hopes were soon dashed by reports of division among the Trump administration overnight, however.
Reuters cited sources familiar with the talks as saying that the agreement between the US and China to roll back tariffs faces "fierce" internal opposition in the White House and from outside advisers.
Sources said the idea of a tariff rollback was not part of the original October 'handshake' deal between Chinese Vice-Premier Liu He and US President Trump.
To add to the confusion, assistant to the president and director of the National Trade Council, Peter Navarro said on the Fox Business Network on Thursday night that there was no agreement at this time to remove any of the existing tariffs as a condition of the 'phase one' deal.
Meanwhile, White House spokeswoman Stephanie Grisham claimed the government was "very, very optimistic" that an agreement will be reached soon.
“Sometimes we can get so caught up in the trade headlines that we don't stop to question why everything doesn't quite add up and align with past behaviour,” said Oanda analyst Craig Erlam.
“Last month, Trump's announcement of a phase one deal sounded very one sided for the US, begging the question of what exactly China is demanding in exchange, now we know.
"Now we have reports suggesting there could be significant roll-backs in the tariffs as part of the deal but this equally raises a number of questions.”
Erlam questioned why the US would give away all the leverage it had built up in exchange for a phase one agreement, adding that there were clearly still a number of issues to overcome.
“And that means there's still plenty of opportunity for everything to collapse.
“The two sides still haven't even agreed on a location and date for the signing ceremony, which may suggest they're not quite as there as some have indicated.”
In equity markets, miners took a hit from the trade deal headlines, with Anglo American losing 2.26%, Antofagasta down 1.1% and BHP falling 1.43%.
British Airways and Iberia parent IAG descended 0.55% after it cut its capacity growth forecasts for the next three years, and lowered its average earnings per share growth forecast to 10% per year from 12%.
Insurer Phoenix Group 1.36% fell after announcing that chief executive officer Clive Bannister will retire on 10 March 2020, after the company’s full-year results, and be succeeded by former Aviva executive Andy Briggs.
Royal Mail gave up 1.48% after saying it was seeking an injunction at the High Court to stop works from striking.
The company said there were “irregularities” in the ballot of Communications Workers Union members that meant the vote for industrial action was unlawful.
On the upside, Games Workshop surged 19.29% after the maker of miniature wargames said trading since its update in September had continued "well", with profit and sales ahead of the previous year, and that royalties receivable were "significantly" ahead of the prior year.
Beazley racked up solid gains of 7.05% after the Lloyd's insurer posted 12% growth in gross written premiums for the nine months to the end of September.
Dunelm was in the green by 2.87% after an upgrade to 'buy' from 'neutral' at UBS.
"Dunelm's PE premium to the sector is down 28% since September despite our new analysis showing clear visibility of market share gains and future growth," it said.
FTSE 100 - Risers
London Stock Exchange Group (LSE) 6,904.00p 2.34%
Centrica (CNA) 72.94p 2.30%
DCC (DCC) 7,496.00p 1.52%
Hiscox Limited (DI) (HSX) 1,269.00p 1.20%
GlaxoSmithKline (GSK) 1,737.00p 0.80%
Experian (EXPN) 2,388.00p 0.76%
British American Tobacco (BATS) 2,885.50p 0.72%
Aveva Group (AVV) 4,244.00p 0.71%
Severn Trent (SVT) 2,211.00p 0.64%
Unilever (ULVR) 4,681.50p 0.58%
FTSE 100 - Fallers
Ocado Group (OCDO) 1,189.50p -7.14%
Evraz (EVR) 370.80p -3.81%
NMC Health (NMC) 2,318.00p -3.74%
Burberry Group (BRBY) 2,044.00p -3.49%
Rio Tinto (RIO) 4,205.50p -2.92%
Smurfit Kappa Group (SKG) 2,684.00p -2.75%
Intertek Group (ITRK) 5,250.00p -2.49%
Auto Trader Group (AUTO) 534.20p -2.34%
Prudential (PRU) 1,368.00p -2.29%
Sainsbury (J) (SBRY) 201.00p -2.24%
FTSE 250 - Risers
Games Workshop Group (GAW) 5,375.00p 19.29%
Aston Martin Lagonda Global Holdings (AML) 467.00p 9.91%
Sirius Minerals (SXX) 3.20p 7.32%
Beazley (BEZ) 577.00p 7.05%
TI Fluid Systems (TIFS) 220.50p 5.50%
Morgan Advanced Materials (MGAM) 270.00p 3.45%
Tate & Lyle (TATE) 718.40p 3.10%
Spirent Communications (SPT) 207.00p 2.99%
Dunelm Group (DNLM) 787.50p 2.87%
888 Holdings (888) 162.20p 2.47%
FTSE 250 - Fallers
Ferrexpo (FXPO) 128.65p -6.81%
Investec (INVP) 440.60p -6.37%
Riverstone Energy Limited (RSE) 467.50p -4.00%
AJ Bell (AJB) 392.50p -3.80%
Playtech (PTEC) 391.10p -3.76%
Provident Financial (PFG) 435.00p -3.23%
Galliford Try (GFRD) 703.00p -3.17%
Capita (CPI) 155.00p -2.97%
Rank Group (RNK) 213.00p -2.96%
Marks & Spencer Group (MKS) 186.00p -2.82%