tocks in London were lower at midday on Friday on renewed trade concerns, as China vowed to take action should the US push ahead with tariffs.
The FTSE 100 index was down 0.8%, or 58.44 points, at 7,707.34 at midday. The mid-cap FTSE 250 index was down 0.7% at 21,174.03. The AIM All-Share index was down 0.2% at 1,104.36.
The Cboe UK 100 was down 0.9% at 13,078.87, the Cboe UK 250 was down 0.6% at 19,394.48, and the Cboe UK Small Companies was up 0.1% at 12,934.94.
China said it would retaliate with tariffs of its own if the US goes ahead with its plans to impose punishing tariffs on tens of billions of dollars of Chinese goods, under US President Donald Trump.
«If the US side adopts unilateral measures of protectionism and damages China’s interests, then we will respond right away and take necessary measures to resolutely safeguard our own legitimate rights and interests,» Chinese Foreign Ministry spokesman Geng Shuang told journalists.
«The biggest concern here is naturally that this will continue to escalate and more and more counter-tariffs will be imposed, something that will harm all economies and weigh on investor sentiment. Perhaps Trump feels that the strength of the US economy and recent success in Singapore gives him the breathing room to make a sacrifice on the economy and jobs in an attempt put additional pressure on other countries,» said Oanda senior market analyst Craig Erlam.
Stocks in New York were set for a lower open on Friday amid renewed trade fears.
The DJIA was called down 0.6%, the S&P 500 index down 0.4% and the Nasdaq Composite 0.2%.
On the London Stock Exchange, Rolls-Royce Holdings was the best blue chip performer at midday up 8.1% after the jet engine maker laid out progressive midterm financial targets in the wake of a restructuring drive.
Rolls-Royce is targeting to exceed GBP1 per share of free cash flow generation and a cash flow return on invested capital of 15% in the medium term. In 2017, free cash flow generation stood at 15 pence, while return on invested capital was 9%. The company also said that it is well-placed to now exceed free cash flow of GBP1 billion by 2020.
Rolls-Royce also retained its 2018 free cash flow guidance of around GBP450 million, up or down GBP100 million.
«The best measure of a company’s ability to create value for its shareholders is delivering a return on capital greater than its cost of capital. And a targeted cash flow return on invested capital of 15% (compared with 9% last year) would likely be a long way ahead of the cost of funding the business through equity or debt,» noted AJ Bell’s Russ Mould.
Tesco was second best performer up 2.0% after the UK’s largest supermarket chain delivered its tenth straight quarter of rising sales, buoyed by its newly acquired wholesaler Booker Group.
For the 13-week period to May 26, the company posted 1.8% growth in group like-for-like sales compared to 1.0% growth recorded a year ago, on the back of a good performance in its core UK and Ireland business.
Tesco also said it gained positive trading momentum from its acquisition of wholesaler Booker Group which delivered like-for-like sales growth of 14.3% including tobacco, 12.4% growth excluding tobacco, driven by a strong underlying performance and new business wins.
Tesco completed its GBP4 billion acquisition of Booker in March — which owns the Premier, Budgens and Londis convenience store brands.
In the FTSE 250, Indivior was the worst performer down 19% after The US Food & Drug Administration approved the first generic versions of Suboxone sublingual film for the treatment of opioid dependence for Indivior’s rivals.
In April, the opioid-addiction treatment producer — which was spun off from Reckitt Benckiser — had filed lawsuits against several companies for the infringement of US patent 9,931,305 relating to their versions of the Indivior’s Suboxone Sublingual Film product.
The lawsuits alleged that rival companies Dr Reddy’s, Actavis, Par, Alvogen and Teva infringed the patent.
Now Canonsburg, Pennsylvania-headquartered Mylan Technologies and India’s Dr Reddy’s have received approval to market buprenorphine and naloxone sublingual film in multiple strengths. Buprenorphine and naloxone sublingual film.
The FDA said that Buprenorphine and naloxone sublingual film should be used as part of a complete treatment plan which includes counseling and psychosocial support for addicts. Buprenorphine helps suppress withdrawal symptoms caused by disconnected use of opioid drugs, while naloxone blocks out the effects.
Stobart Group was down 4.0% after the support services firm said that following the firing of former Chief Executive Andrew Tinkler and the start of legal proceedings against him on Thursday, it would change its structure from a collection of business into a more tightly focused group for Aviation and Energy, and encouraged shareholders to re-elect Iain Ferguson as director and chairman.
Sterling was lower against the dollar quoted at USD1.3277 at midday, versus USD1.3341 at the London equities close on Thursday.
The euro was was down quoted at USD1.1596 at midday, from USD1.1639 at the European equities close Thursday following the release of inflation data from the bloc.
Inflation rose to 1.9% in May from revised 1.3% in April. A similar high rate was last seen in April 2017. The latest rate matched the initial estimate released on May 31. Inflation was in line with the European Central Bank’s target of ‘below, but close to 2%’.
Core inflation that excludes cost of energy, food, alcohol and tobacco, also increased in May, to 1.1% from revised 0.8% a month ago. Final data came in line with flash estimate.
On a monthly basis, the harmonized index of consumer prices gained 0.5% in May.
The single currency suffered heavy selling pressure on Thursday after ECB President Mario Draghi acknowledged that interest rates are likely to remain unchanged through summer 2019 amid rising economic uncertainty. In addition, the central bank also downgraded its GDP forecasts as it announced its plan to start exiting its massive quantitative easing by the end of this year.
«While the ECB may have delayed when markets now expect to see the first rate rise, it still remains clear that quantitative easing will still be over, and the eurozone trend is towards a gradual move into eventual monetary tightening,» said IG market analyst Joshua Mahony.
In mainland Europe, the CAC 40 in Paris was up 0.3% while the DAX 30 in Frankfurt was down 0.1% at midday.
Germany’s flagship index was lower amid a row between Chancellor Angela Merkel and her interior minister over migrant policies.
The leader of the German Social Democrats, voiced her support on Friday for her coalition partner Merkel in a fiery dispute over asylum policy reform that has embroiled the latter’s conservative bloc in recent days.
Andrea Nahles hit out at the Christian Social Union, the more conservative Bavarian sister party of Merkel’s Christian Democrats, who have reportedly threatened to defy the chancellor and empower police to start rejecting asylum seekers at German borders who are registered elsewhere in Europe.
Merkel opposes unilateral asylum reform on Germany’s part as she fears it would undermine EU solidarity. Instead, she wants to find an EU-level solution to illegal immigration at a summit in Brussels set for June 28 and 29.