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London midday: Stocks maintain losses amid trade war fears; Smiths tumbles on results

London stocks were still in the red by midday as financial markets were hit by fresh worries about a trade war after China promised immediate retaliation against the import tariffs levied by US President Donald Trump.
The FTSE 100 was down 0.6% to 6,908.41, having tumbled to its lowest finish in over 15 months the day before at 6,952.59. Meanwhile, the pound was down 0.2% against the euro at 1.1442 and up 0.2% versus the greenback at 1.4118.

Overnight, the Dow Jones index closed 2.9% lower, the S&P 500 dropped 2.5% and the Nasdaq 2.4% as equities experienced their biggest sell off since 8 February.

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. The London index was also faring better than its European counterparts, with the DAX, CAC and Stoxx 600 all down more than 1%.

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, rallying 3% 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.

In terms of sectors, heavily-weighted miners were experiencing the worst losses as copper and iron prices fell, amid worries that demand for the metals would suffer in a trade war. Shares in Anglo American, Glencore, Antofagasta and BHP Billiton all lost ground.

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) 6,908.41 -0.64%
FTSE 250 (MCX) 19,283.79 -0.57%
techMARK (TASX) 3,175.16 0.14%

FTSE 100 - Risers

Next (NXT) 4,912.00p 6.11%
Micro Focus International (MCRO) 948.20p 3.99%
GlaxoSmithKline (GSK) 1,318.00p 3.47%
Fresnillo (FRES) 1,178.50p 1.64%
Centrica (CNA) 134.05p 1.63%
Marks & Spencer Group (MKS) 269.30p 1.51%
Randgold Resources Ltd. (RRS) 5,830.00p 1.18%
Associated British Foods (ABF) 2,457.00p 1.15%
SSE (SSE) 1,225.00p 0.99%
Vodafone Group (VOD) 194.04p 0.87%

FTSE 100 - Fallers

Smiths Group (SMIN) 1,422.50p -7.39%
Intertek Group (ITRK) 4,665.00p -3.32%
Anglo American (AAL) 1,650.60p -2.69%
Glencore (GLEN) 349.55p -2.69%
Rentokil Initial (RTO) 266.10p -2.42%
Old Mutual (OML) 241.10p -2.35%
Standard Chartered (STAN) 712.80p -1.97%
Antofagasta (ANTO) 932.00p -1.96%
Just Eat (JE.) 704.00p -1.90%
BHP Billiton (BLT) 1,368.80p -1.89%

FTSE 250 - Risers

TI Fluid Systems (TIFS) 246.00p 3.36%
Hochschild Mining (HOC) 196.30p 3.26%
TalkTalk Telecom Group (TALK) 112.20p 3.12%
Ted Baker (TED) 2,623.92p 2.66%
Dunelm Group (DNLM) 523.00p 2.65%
Softcat (SCT) 624.76p 2.42%
Paragon Banking Group (PAG) 483.00p 2.42%
BCA Marketplace (BCA) 154.60p 2.11%
Games Workshop Group (GAW) 2,230.00p 1.83%
Greencore Group (GNC) 130.35p 1.72%

FTSE 250 - Fallers

Contour Global (GLO) 232.00p -4.92%
Baillie Gifford Japan Trust (BGFD) 789.00p -4.01%
Ferrexpo (FXPO) 269.00p -3.93%
Herald Investment Trust (HRI) 1,099.50p -3.55%
RHI Magnesita N.V. (DI) (RHIM) 4,365.00p -3.22%
Indivior (INDV) 395.20p -3.21%
On The Beach Group (OTB) 537.37p -3.18%
Fidelity China Special Situations (FCSS) 234.89p -2.94%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 349.50p -2.92%
Jupiter European Opportunities Trust (JEO) 678.68p -2.77%

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