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London close: Stocks end down amid trade war woes; Smiths slumps but Next rallies

London stocks ended down but off lows on Friday amid trade war fears, with engineer Smiths slumping on the back of disappointing results but retailer Next in the black.
The FTSE 100 closed down 0.4% at 6,921.94 , having tumbled to its lowest finish in over 15 months the day before at 6,952.59. Meanwhile, the pound was down 0.1% against the euro at 1.1448 and up 0.4% versus the greenback at 1.4151.

On Thursday night, Trump signed off on 25% tariffs on $50bn worth of Chinese imports in a bid to punish the People's Republic for intellectual property infringements.

China was quick to retaliate, saying it was planning to impose tariffs on $3bn worth of US products. The list included pork, wine, fruit, nuts and stainless steel pipes, among other things. In a statement earlier on Friday, the Chinese commerce ministry said: "China doesn't hope to be in a trade war, but is not afraid of engaging in one."

Beijing was also said to have intervened in stock markets in response to the massive sell-off. According to Bloomberg, state-backed funds bought large-cap stocks including China Petroleum & Chemical Corp. and China Life Insurance Co. with its purchases intensifying in the afternoon.

Adding to the downbeat tone were worries about Trump's decision, also overnight, to replace national security adviser HR McMaster with war-hungry former UN ambassador John Bolton, despite repeated denials earlier in the week from the White House that such a move was in the offing.

While stocks sold off heavily in the US and Asia, losses in the UK were much less pronounced, with some analysts suggesting that US tariffs were much smaller than initially thought.

UBS said the wording of the presidential order suggests a total of $12.5bn, which is about 20% of what was implied in earlier reports. "The same back-of-the-envelope calculations we used before suggest the effect on inflation and output would be just a few basis points," it said.

"The US actions provoked a Chinese response, but that response is small," UBS said, adding that its base-case of no full-scale trade war appears to hold.

Although trade war concerns were clearly the main theme of the day, there was also some Brexit-related news for investors to mull over as EU leaders approved guidelines for the negotiation of future relations with the UK after it leaves. The text on trade, security and other issues was adopted in Brussels, paving the way for the next phase of Brexit talks.

In UK corporate news, Next bucked the trend as it kept the dividend flat despite reporting a 5.6% fall in earnings per share after store sales fell in the year to 31 January. Analysts said the fact it has maintained its full-year guidance will be taken well following recent weakness and negative news flow from the UK retail sector.

"Next's 54-page-long results release is a whopper but it is what is missing from the statement that matters more than what is in it - there is no profit warning, there is no dividend cut and there is no sense of panic," said Russ Mould, investment director at AJ Bell.

GlaxoSmithKline was in the black after saying it's no longer interested in Pfizer and announcing European and Japanese approval for its Shingrix shingles vaccine.

Micro Focus also rose, clawing back some of the losses it suffered earlier in the week after a profit warning on Monday.

Engineer Smiths Group slumped after it posted a 12% drop in interim profit as revenue fell, although it did reiterate its guidance for the year.

Shares in Indivior took a beating after the company said it was likely to appeal a ruling from the US District Court of Delaware, which found that Alvogen does not infringe the asserted claims of three of its US patents protecting its key Suboxone Film treatment for opioid addiction. If Alvogen is successfully launched in the US, Indivior said it believes "it could potentially result in a rapid and material loss of market share for Suboxone Film in the US" within months.

There wasn't much going on on the broker note front, although Mitie did get a big boost from an upgrade to 'overweight' from 'underweight' at Barclays.



Market Movers

FTSE 100 (UKX) 6,921.94 -0.44%
FTSE 250 (MCX) 19,319.48 -0.38%
techMARK (TASX) 3,176.33 0.18%

FTSE 100 - Risers

Next (NXT) 4,984.00p 7.67%
Micro Focus International (MCRO) 956.00p 4.85%
Fresnillo (FRES) 1,208.00p 4.18%
GlaxoSmithKline (GSK) 1,315.60p 3.28%
Randgold Resources Ltd. (RRS) 5,932.00p 2.95%
Centrica (CNA) 134.70p 2.12%
SSE (SSE) 1,231.50p 1.53%
Kingfisher (KGF) 296.70p 1.37%
Marks & Spencer Group (MKS) 268.40p 1.17%
Barratt Developments (BDEV) 525.00p 1.00%

FTSE 100 - Fallers

Smiths Group (SMIN) 1,469.00p -4.39%
Old Mutual (OML) 239.00p -3.20%
Intertek Group (ITRK) 4,707.00p -2.45%
Rolls-Royce Holdings (RR.) 861.20p -2.31%
Anglo American (AAL) 1,657.60p -2.28%
Aviva (AV.) 493.10p -2.16%
Carnival (CCL) 4,582.00p -2.11%
InterContinental Hotels Group (IHG) 4,319.00p -2.09%
Direct Line Insurance Group (DLG) 375.30p -2.06%
Just Eat (JE.) 703.00p -2.03%

FTSE 250 - Risers

Hochschild Mining (HOC) 202.00p 6.26%
Softcat (SCT) 646.00p 5.90%
TalkTalk Telecom Group (TALK) 115.10p 5.79%
Stobart Group Ltd. (STOB) 229.50p 4.32%
BCA Marketplace (BCA) 157.80p 4.23%
Dunelm Group (DNLM) 530.00p 4.02%
Ted Baker (TED) 2,654.00p 3.83%
TI Fluid Systems (TIFS) 246.00p 3.36%
Pets at Home Group (PETS) 169.10p 3.17%
Tullow Oil (TLW) 195.05p 2.79%

FTSE 250 - Fallers

Indivior (INDV) 382.80p -6.25%
Ferrexpo (FXPO) 265.30p -5.00%
Contour Global (GLO) 234.00p -4.10%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 348.00p -3.33%
Essentra (ESNT) 437.40p -3.23%
Saga (SAGA) 109.50p -3.18%
Fidelity China Special Situations (FCSS) 234.50p -3.10%
On The Beach Group (OTB) 538.00p -3.06%
Ultra Electronics Holdings (ULE) 1,334.00p -3.05%
RDI Reit (RDI) 32.00p -2.74%

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