London close: US-China trade worries and stronger pound weigh on shares
London stocks finished on a mixed note on Monday with worries around Sino-US trade relations and escalating protests in Hong Kong together with a jump in the pound combining to drag the top flight index lower.
At the weekend, US President Donald Trump said that talks between the two were moving more slowly than he had hoped and that China was keener to do a deal than the US.
Against that backdrop, the FTSE 100 was down 0.42% at 7,328.54, falling further than its European counterparts.
In parallel, the pound rose 0.55% against the US dollar to 1.28536 and by 0.46% versus the euro to trade at 1.1647, after Nigel Farage announced that the Brexit party would not run in Tory constituencies in the upcoming general election, so as not to undermine the Conservatives' chances of winning.
A stronger pound tends to dent the top-flight index as around 70% of its constituents derive most of their earnings from overseas.
Neil Wilson, chief market analyst at Markets.com, said: "We are starting the week in risk-off mode: Fiery protests in Hong Kong and the US-China trade war are conspiring to dampen the mood in markets on Monday. As usual expect the risk switch to be flicked to ‘on’ pretty quickly with the standard trade war pump in due course. And in terms of Hong Kong, we wonder how long term this de-risking kneejerk will last.
"It comes after last week’s pushback over claims the US is prepared to roll back existing tariffs as part of any deal. Despite this, it’s clear the economic reality is not lost on the White House."
To the upside on the other hand, both on the Footsie and the second-tier index, the latter of which added 0.26% to finish at 20,10.03, it was shares of lenders and homebuilders shares that performed best, as the risk of a so-called 'hard Brexit' appeared to recede further.
Yet data released by the Office for National Statistics at the start of the week showed the UK economy avoided falling into a recession in the third quarter.
Gross domestic product grew 0.3%, returning to growth following a 0.2% contraction in the second quarter but coming in a little below expectations of 0.4% growth. Two quarters of contraction in a row would have indicated a recession.
On an annual basis, GDP was up 1% in the three months from July to September, down from 1.3% growth in the previous quarter and missing expectations for 1.1% growth. It marked the weakest rate of quarter-on-year growth since the first quarter of 2010.
David Cheetham, chief market analyst at XTB, said: "While the positive GDP reading means that the UK has managed to stave off a recession for another year there is little doubt that the economy is spluttering, with political uncertainty and a slowdown in global activity clearly taking their toll."
Miners were the biggest drag on the market, with shares of Antofagasta, Glencore, Anglo American, Evraz and BHP all lower.
BHP was in the red even as it outlined a confident outlook for its petroleum business to deliver earnings margins of more than 60% and annual increased production by up to 3% through the 2020s.
Virgin Money finished flat having been knocked lower at the start of the session by a downgrade at Investec and Rolls-Royce was hit by a downgrade at Societe Generale.
On the upside, shares of Greggs surged after the bakery chain lifted its profit expectations for 2019 as it reported a 12.4% increase in total sales for the six weeks to 9 November.
Sirius Minerals rallied after it outlined a two-stage development plan for its flagship project in Yorkshire.
Kainos Group gained after reporting a rise in first-half profit and revenue thanks to strong momentum in its digital services business and announcing two new acquisitions, while luxury car maker Aston Martin Lagonda was boosted by an upgrade at HSBC.
FTSE 100 - Risers
Royal Bank of Scotland Group (RBS) 221.60p 4.04%
Lloyds Banking Group (LLOY) 58.60p 4.02%
Persimmon (PSN) 2,450.00p 3.90%
Barclays (BARC) 171.64p 3.12%
Berkeley Group Holdings (The) (BKG) 4,589.00p 3.12%
BT Group (BT.A) 192.98p 3.12%
Barratt Developments (BDEV) 642.60p 2.52%
JD Sports Fashion (JD.) 751.40p 2.20%
Whitbread (WTB) 4,323.00p 1.86%
United Utilities Group (UU.) 843.80p 1.74%
FTSE 100 - Fallers
Ocado Group (OCDO) 1,106.00p -7.36%
Evraz (EVR) 351.00p -5.34%
Rolls-Royce Holdings (RR.) 739.60p -4.79%
Hiscox Limited (DI) (HSX) 1,217.00p -4.41%
Glencore (GLEN) 245.50p -3.50%
Antofagasta (ANTO) 905.00p -3.02%
Polymetal International (POLY) 1,175.00p -2.89%
Anglo American (AAL) 2,003.50p -2.66%
Fresnillo (FRES) 656.40p -2.52%
Mondi (MNDI) 1,669.00p -2.31%
FTSE 250 - Risers
Greggs (GRG) 2,064.00p 16.54%
Sirius Minerals (SXX) 3.47p 8.45%
Aston Martin Lagonda Global Holdings (AML) 504.00p 7.92%
Kainos Group (KNOS) 540.00p 5.47%
Savills (SVS) 967.00p 4.20%
Redrow (RDW) 628.00p 3.97%
Dunelm Group (DNLM) 822.00p 3.94%
FDM Group (Holdings) (FDM) 783.00p 3.57%
Mitchells & Butlers (MAB) 440.00p 3.29%
Computacenter (CCC) 1,420.00p 3.20%
FTSE 250 - Fallers
Beazley (BEZ) 544.00p -5.72%
Hochschild Mining (HOC) 184.60p -3.20%
Schroder Oriental Income Fund Ltd. (SOI) 256.00p -2.66%
Electrocomponents (ECM) 706.00p -2.62%
Genus (GNS) 3,000.00p -2.60%
Lancashire Holdings Limited (LRE) 699.50p -2.37%
Renishaw (RSW) 4,086.00p -2.34%
Cineworld Group (CINE) 224.50p -2.31%
Convatec Group (CTEC) 190.80p -2.03%
Marshalls (MSLH) 727.50p -1.95%