London open: Stocks fall amid China-US trade deal confusion; Royal Mail slumps

London stocks fell in early trade on Thursday, tracking losses in Asia amid conflicting reports about the progress being made in China-US trade talks.

At 0830 GMT, the FTSE 100 was down 0.6% at 7,220.00, while the pound was up 0.1% against the dollar at 1.2937 and flat versus the euro at 1.1674.

Late on Wednesday, Reuters reported that a phase one trade deal between the US and China might not be agreed this year. However, there were also reports overnight that China’s top negotiator, Liu He, is "cautiously optimistic" about signing a phase one deal.

In addition, both chambers of US Congress have passed a bill in support of pro-democracy protesters in Hong Kong, adding to concerns about tensions between the US and China.

CMC Markets analyst Michael Hewson said: "The shadow boxing between China and the US has continued this week over when any phase one US-China trade deal may get signed. Despite the cautious optimism of China’s lead negotiator Liu He it is becoming, for all investors optimism, unlikely that any phase one China trade deal could be signed by the end of this year.

"With a presidential election still almost a year away, President Trump is likely to want to keep this particular pot simmering so to speak without getting any worse, for quite a while longer. The unrest in Hong Kong may well give the US President the perfect opportunity to do that if he signs the legislation passed by Congress supporting the Hong Kong protesters."

In equity markets, chemicals company Johnson Matthey was the worst performer on the top-flight index as it said half-year pre-tax profit declined 8% while net debt rose.

Royal Mail was under the cosh as it said its transformation programme was behind schedule and cut its interim dividend. Reported pre-tax profit for the six months to 29 September rose to £173m from £33m the year before as revenue ticked up 5.1% to £5.2bn, with the company noting its best UK revenue performance in five years. On an adjusted basis, however, pre-tax profit fell to £146m from £183m.

Industrial flow control equipment maker Rotork retreated after saying it expects to deliver "moderately lower" sales year-on-year in 2019 on an organic constant currency basis.

Elsewhere, Carnival, B&M European Value Retail and Tate & Lyle all fell as their stock went ex-dividend.

On the upside, British American Tobacco was sitting pretty at the top of the FTSE 100, while Imperial Brands also rallied following reports overnight that US regulators have abandoned plans to cut the level of nicotine in cigarettes.

Plus500 and IG Group were both higher after well-received interim results from online trading company CMC Markets.

Market Movers

FTSE 100 (UKX) 7,220.00 -0.59%
FTSE 250 (MCX) 20,368.99 -0.52%
techMARK (TASX) 3,988.46 -0.26%

FTSE 100 - Risers

British American Tobacco (BATS) 2,995.50p 4.70%
Centrica (CNA) 75.36p 3.66%
GlaxoSmithKline (GSK) 1,707.80p 0.66%
Admiral Group (ADM) 2,039.00p 0.59%
Smith & Nephew (SN.) 1,657.50p 0.33%
SEGRO (SGRO) 866.20p 0.25%
Just Eat (JE.) 753.60p 0.16%
Vodafone Group (VOD) 152.48p 0.04%
Diageo (DGE) 3,113.00p -0.03%
Associated British Foods (ABF) 2,457.00p -0.04%

FTSE 100 - Fallers

Johnson Matthey (JMAT) 3,092.00p -3.86%
Hargreaves Lansdown (HL.) 1,731.50p -2.53%
Carnival (CCL) 3,098.00p -1.99%
Ashtead Group (AHT) 2,282.00p -1.89%
Rolls-Royce Holdings (RR.) 707.40p -1.75%
Evraz (EVR) 357.80p -1.62%
DCC (DCC) 6,392.00p -1.60%
Auto Trader Group (AUTO) 530.40p -1.60%
Antofagasta (ANTO) 875.80p -1.60%
Croda International (CRDA) 4,732.00p -1.58%

FTSE 250 - Risers

TalkTalk Telecom Group (TALK) 107.50p 2.28%
Stagecoach Group (SGC) 134.00p 1.90%
888 Holdings (888) 165.80p 1.84%
Plus500 Ltd (DI) (PLUS) 762.00p 1.41%
IG Group Holdings (IGG) 666.40p 1.15%
Beazley (BEZ) 543.50p 1.12%
CLS Holdings (CLI) 262.50p 0.77%
Marks & Spencer Group (MKS) 187.30p 0.70%
Bovis Homes Group (BVS) 1,171.00p 0.69%
Babcock International Group (BAB) 544.00p 0.48%

FTSE 250 - Fallers

Rotork (ROR) 315.30p -6.02%
Avast (AVST) 429.20p -3.38%
Premier Oil (PMO) 84.70p -3.13%
Wood Group (John) (WG.) 339.70p -2.86%
Elementis (ELM) 167.90p -2.38%
Hays (HAS) 161.90p -2.06%
Tate & Lyle (TATE) 692.40p -2.04%
Mediclinic International (MDC) 391.90p -1.95%
Tullow Oil (TLW) 139.20p -1.83%
Bodycote (BOY) 850.00p -1.73%