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LONDON (Alliance News) - Stock prices in London were lower at midday on Monday amid an escalation in trade tensions between the US and China, exacerbated by US President Donald Trump's announcement of tariffs on Mexican goods.On Sunday, China published a white paper that said the US should take responsibility for the setback in the US-China trade talks. The paper accused the US of being an untrustworthy negotiator and backtracking on its commitments in trade negotiations."On the trade friction started by the US: if the US wants to talk, we will keep the door open," Chinese Defence Minister Wei Fenghe said during a three-day international security dialogue in Singapore. "If they want to fight, we will fight to the end."The tough talk from China comes as a top White House official said Trump is "deadly serious" about slapping tariffs on imports from Mexico. But acknowledged there are no concrete benchmarks being set to assess whether Mexico was stemming the flow of migrants enough to satisfy the administration.In London, the FTSE 100 was down 26.02 points, or 0.4%, at 7,135.70 at midday. The FTSE 250 was down 141.55 points, or 0.8%, at 18,828.70. The AIM All-Share was down 0.9% at 951.28.The Cboe UK 100 index was down 0.3% at 12,105.55. The Cboe UK 250 was down 0.9% at 16,911.53, but the Cboe UK Small Companies was 0.1% higher at 11,788.66.In Paris the CAC 40 and the DAX 30 in Frankfurt were down 0.2%. IG Group's Josh Mahony said: "Global markets are kicking off a new week in a similar vein as the week just gone, with another bout of selling taking hold amid a ramp-up in trade war fears. In a week that saw the focus shift to a breakdown in relations between the US and Mexico, a weekend report from China drew the ire of markets once more. "With China drawing up a list of 'unreliable' US firms that could be targeted in response to the US blacklist, there is a good chance we will see a further escalation of the trade war in the coming days. The Chinese report cited exorbitant demands from the US, and that is very telling as a signal that Chinese and US expectations are wildly out of sync."On Saturday, the official Xinhua news agency reported that Chinese authorities had launched an investigation into US courier service FedEx after it diverted several packages sent by Huawei to the US.Huawei has become a central pawn in the conflict. The US accuses the Chinese tech firm of stealing trade secrets, attempting to breach Iran sanctions and facilitating the Chinese government's spying. It has not shown evidence to back the spying accusation.Stocks in New York were set to open lower, with the DJIA and S&P 500 index called down 0.3%, while the Nasdaq Composite was called down 0.5%.In the FTSE 100, Mexican gold miner Fresnillo was up 1.9%, tracking spot gold prices higher. The yellow metal was quoted at USD1,315.80 an ounce midday Monday, up from USD1,300.10 at the London equities close Friday.At the other end of the large cap index, ITV was the worst performer, down 2.9% after Goldman Sachs restarted coverage on the broadcaster with a Neutral rating. In the FTSE 250, Egyptian gold miner Centamin was the best performer, up 8.1%, while fellow midcap gold miners Hochschild Mining and Acacia Mining were up 5.0% and 1.7% respectively. "Gold is picking up safe haven bid as this decline is not just about valuations but about big fears for the global economy. The easing off in the US dollar has also supported gold," said Markets.com analyst Neil Wilson. The pound was quoted at USD1.2650 at midday, up from USD1.2616 at the London equities close Friday. The euro stood at USD1.1173, higher than USD1.1145 at the European equities close Friday.Languishing at the foot of the FTSE 250, Kier Group was down 37% after the construction firm said adjusted operating profit for financial 2019 will be lower than previously expected due to mounting volume pressures on three of its divisions continued.Kier said it has continued to experience volume pressures within its Highways, Utilities and Housing Maintenance businesses.In addition, despite double-digit order book growth, the Buildings business unit's revenue growth for 2019 will be lower than previously forecast, the company said.This will impact the Kier's financial results for the year ending June 30, with revenue expected "broadly in line" with financial 2018 and underlying operating profit around GBP25 million lower than previously guided. A year ago, Kier's revenue amounted to GBP4.5 billion while adjusted profit from operations was GBP160 million. "It wasn't surprising to see the shares slump in early trading in response to all of this bad news. They are now down 85% over the past year and there are clearly fears in the market that the company could be heading for the same fate as Carillion. Dividends are already expected to drop by 75% this year and that could worsen further as the year goes on. While we don't have a formal view on the company, today's announcement had a bleak tone and investors should be extremely wary," said Share Centre analyst Ian Forrest.On the UK economic front, uncertainty over Brexit has continued to hurt the UK's manufacturing sector, the IHS Markit-CIPS purchasing managers' index showed. The manufacturing PMI reading was 49.4 for May, down "sharply" from 53.1 in April. A figure over 50 represents growth and below 50 contraction. This is the first time the figure has fallen below the neutral 50 mark since July 2016, the month after the Brexit referendum, with UK manufacturers reporting "increased difficulties" in getting clients to commit to new contract. This, IHS said, reflects a high level of inventories due to recent stockpiling ahead of the original date for Brexit in late March. Manufacturers reported lower demand from Asia and Europe, with EU demand sliding as "clients divert supply chains away from the UK", Markit added. But despite the poor PMI reading, manufacturers in the UK remain optimistic, IHS said, with some 49% expecting output to be higher in 12 months' time, with just 7% seeing things being worse. "The UK manufacturing PMI data has entered in the recession territory and the question which many investors are asking is if the law makers are going to do something about this. In terms of sterling, the downward move wasn't that sharp, everyone is focused on one thing: Trump's arrival in the UK," ThinkMarkets analyst Naeem Aslam.Trump launched a trademark Twitter diatribe at London Mayor Sadiq Khan as he touched down in the UK for a state visit that will see him meeting the Queen and other senior royals, as well as Theresa May in her final days as prime minister.The US president and the first lady were greeted by Foreign Secretary Jeremy Hunt and US ambassador to the UK Woody Johnson at Stansted Airport on Monday morning as they embark on their three-day trip.Trump arrived in the UK having already created a considerable degree of political turbulence with comments on the Tory leadership race, Brexit and the duchess of Sussex.Speaking to reporters just before he left the US, he praised Boris Johnson and Nigel Farage, talked up the prospect of a Brexit trade deal, and rebuked Khan, who on Sunday described the president as "just one of the most egregious examples of a growing global threat" and compared the language he has used to that of the "fascists of the 20th century"."Trump's state visit includes a business breakfast on Tuesday which leaders from numerous FTSE 100 companies are expected to attend, giving them the opportunity to interact with the US president and UK Prime Minister Theresa May. Trade agreements are certain to be a hot topic of discussion at the breakfast event in light of the US spat with China and the prospects for Anglo-US trade agreements post-Brexit," said AJ Bell's Russ Mould. In economic news from the European continent, eurozone manufacturing activity remained entrenched inside contraction territory in May, final survey data from IHS Markit showed.The factory Purchasing Managers' Index came in at 47.7 in May, in line with flash estimate, but down from 47.9 in the previous month. A score below 50 indicates contraction. The sector has shrunk over the last four successive months.The PMI suggested that the sector will act as a drag on the wider economy in the second quarter, Chris Williamson, chief business economist at Markit said.Germany's factory PMI slid to 44.3 in May from 44.4 a month ago, said Markit. This was one of the lowest readings since mid-2012. The score matched the flash estimate.In Germany, rates of decline in output and new orders eased, but employment fell the most in almost six-and-a-half years.Still to come in the economic events calendar is the US manufacturing PMI at 1445 BST.