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LONDON (Alliance News) - Stocks closed lower Monday on the actions of the Chinese and Italian governments, as the pound continued its fall on news from 10 Downing Street there remains "big issues" in the way of any potential Brexit deal."Equity markets are in the red as we approach the close of trading as concerns about China and Italy, prompted traders to dump equities. The Chinese central bank lowered the reserve required ratio again - the fourth time this year," said David Madden, market analyst at CMC Markets UK. Madden continued: "The move is viewed as a sign of weakness and dealers are fearful the Chinese economy is cooling at a quick rate and needs support. Beijing and Washington DC are still locked in a trade spat, and trimming the reserve required ratio could be construed as an indication that they are in it for the long haul."The FTSE 100 index closed down 1.2%, or 85.21 points at 7,233.33. The FTSE 250 ended 1.4% lower, or 271.95 points, at 19,646.08, and the AIM All-Share closed down 2.7%, or 29.13 points, at 1,040.00.The Cboe UK 100 ended down 1.2% at 12,283.95, the Cboe 250 closed down 1.3% at 17,847.18, and the Cboe Small Companies ended 0.5% lower at 11,959.56.The pound was quoted at USD1.3061 at the London equities close, compared to USD1.3096 at the same time on Friday. Downing Street has played down expectations of agreement on Britain's withdrawal from the EU at a crunch summit next week, warning that "big issues" remain to be resolved.Theresa May's official spokesman said further concessions were needed from the EU side, and warned that no withdrawal agreement could be sealed without a "precise" declaration about the post-Brexit relationship.The comments appeared to pour cold water on upbeat assessments on the prospects of a deal made by senior EU figures over recent days.Just over a week remains before the October 18 summit in Brussels which was initially pencilled in as the deadline for agreement on withdrawal.But Downing Street would say only that the UK was working for a deal "this autumn", fuelling speculation that a special summit in November will be needed to hammer out agreement on issues including the status of the Irish border.Technical talks are continuing at official level in Brussels this week, but no visit by Brexit Secretary Dominic Raab has been announced, and Downing Street would say only that new proposals on the border issue would be released "in due course".In London equities, one of the the biggest fallers in the FTSE 100 was Halma, down 4.7% after Shore Capital downgraded the hazard detection firm to Hold from Buy.Another of Monday's losers, Vodafone, was also lower after a broker downgrade. Jefferies cut its rating on the telecommunications stock to Hold from Buy, leaving Vodafone shares trading down 3.5%.Standard Life Aberdeen ended the day down 2.8% on news Schroders, down 0.8%, and Lloyds Banking, down 1.3%, are in discussions "with a view to working closely together in parts of the wealth sector".Sky News earlier had reported that Lloyds is to inject its GBP13 billion wealth management arm into a new joint venture with Schroders. The deal will see Lloyds owning 50.1% of the new joint venture, with Schroders owning the rest, Sky said.It will be part of a three-pronged tie-up between the companies, with Schroders taking on a GBP109 billion investment management contract from Lloyds-owned Scottish Widows, according to Sky. The contract is currently held by Standard Life Aberdeen but has been terminated by Lloyds over competition worries. Meanwhile at the other end of the blue chip index, Segro gained 1.5% after Goldman Sachs raised the property investor and developer to Buy from Neutral.Catering and support services firm Compass closed up 0.9% after it sold Vision Security for GBP14 million in cash to outsourcing and services company Mitie.Vision Security is a security services provider which offers security systems, as well as manned guarding and key holding services.The acquisition is expected to be completed by the end of OctoberInsurers were among those falling in the FTSE 250 following a third quarter warning from Lancashire Holdings, the stock down ending the day down 5.9%.The reinsurer said it expects to post a negative return on equity for the third quarter of 2018 due to losses from a number of recent natural disasters including Hurricane Florence and typhoons Jebi, Mangkhut and Trami.Lancashire estimates losses from recent natural catastrophe events to be in a range of USD25 million to USD45 million. It also expects to record a USD30 million net loss from its marine portfolio.Other insurers were hit in a negative read-across following the update, with Hiscox down 2.6% and Beazley down 4.2%.IP Group ended down 5.4% after reporting that its portfolio company, Diurnal, did not see Chronocort meet its primary objective in a phase three trial.Chronocort is intended to treat congenital adrenal hyperplasia, an orphan condition in which patients have a block in cortisol production. The goal of the phase three trial was to "demonstrate the superiority of Chronocort to conventional therapy", a goal which was not met as both Chronocort and conventional therapy proved equivalent.Shares in Diurnal were a steep 60% lower at close.The euro stood at USD1.1476 at the European equities close, against USD1.1509 the prior day.Friday's sell-off continued in mainland Europe with the CAC 40 in Paris ending down 1.1%, while the DAX 30 in Frankfurt ended 1.4% lower.David Madden said: "The yield on the 10-year Italian government bond hit its highest level in over four years as the Rome administration is set to be on a collision course with Brussels over the budget deficit. Matteo Salvini, the joint deputy prime minister, confirmed the country will not be dropping the euro, but he asked that the ratings agencies be fair when assessing Italy's credit worthiness." "Investors are nervous about the prospect of an already very indebted nation potentially clocking up even more debt."Germany's industrial production declined unexpectedly in August on a notable weakness in construction, suggesting that the economy lost some momentum in the third quarter.Data from Destatis showed that industrial output slid 0.3% from July, confounding expectations for an increase of 0.5%. This was the third consecutive decline in output. Production had decreased 1.3% in July.On a yearly basis, industrial production logged a fall of 0.1% in August, in contrast to the expected growth of 0.1% and a 1.5% increase seen in July.The fall in industrial output was much weaker than expected and suggests that the economy is very unlikely to match second quarter's 0.5% expansion in the third quarter, Jennifer McKeown, an economist at Capital Economics, said.But Germany will continue to be one of Eurozone's strongest performers, the economist noted.Elsewhere, a survey from the think tank Sentix showed that despite the negative discussions about the automotive industry and the question marks over the continued existence of the current government coalition, the German economic data remain stable.The investor confidence index for Germany rose to 20.0 in October from 18.1 in September.In UK data on Monday, a quarterly survey from the British Chambers of Commerce said the UK economy is stuck in a rut due to Brexit uncertainties.The balance of manufacturing firms reporting a fall in domestic sales rose to 24, while that of services firms fell to 23. Domestic orders for manufacturing declined, while services reported improved domestic orders.The lobby warned that the slowdown in exports in the manufacturing sector, and many services firms seemingly giving up trying to hire new staff, should be cause for concern."There has never been a more important time for the government to bolster business investment, competitiveness and productivity, in the face of significant Brexit headwinds," Adam Marshall, Director General of the BCC said.Stocks in New York were heading south at the London equities close on rising fears of more hikes from the US central bank as the yield on the 10-year hit a seven year high on Friday.The DJIA was 0.2% lower, the S&P 500 index down 0.2% and the Nasdaq Composite 0.5% lower.Chinese Foreign Minister Wang Yi gave US Secretary of State Mike Pompeo a cool reception in Beijing, as he warned of "conflict and confrontation" between the two world powers.Wang told Pompeo the US has escalated trade frictions between the two economies, and undermined China's interests on issues such as Taiwan and other domestic and foreign policies, the state-owned China Daily reported."We demand the US stop the unwarranted accusations and wrongdoings against China immediately," Wang said, warning against the US "taking a wrong approach of conflict and confrontation."Pompeo is on an East Asia tour focused on deciding the next steps in North Korea's denuclearization.Brent oil was quoted at USD83.49 a barrel at the equities close from USD84.69 at the same time the prior day. Gold was quoted at USD1,185.30 an ounce at the London equities close against USDUSD1,201.70 on Friday.The economic calendar on Tuesday has British Retail Consortium Retail Sales for September at 0001 BST, UK Financial Policy Committee statement at 0930 BST, German August imports and exports at 0700 BST, and US Treasury 52-week, 4-week, 3-month and 6-month bill auctions. The UK corporate calendar has full year production from Centamin, trading statements from Greggs, YouGov, Ceres Power and half year results from Lidco.