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* FTSE 100 down 0.4%, FTSE 250 down 0.3%
* Mondi slips after Q3 update, drags rivals
* Burberry bounces on LVMH results
* FTSE 100 forms "Death Cross" pattern
(Adds company news items, analyst quotes, updates share moves)
By Muvija M and Shashwat Awasthi
Oct 10 (Reuters) - London's FTSE 100 handed back gains on
Thursday as trade sentiment turned sour after yet another twist
in the U.S.-China trade war saga ahead of official talks, while
packaging firm Mondi slumped after a weak update.
The FTSE 100 index dipped 0.4% by 0755 GMT, with
Mondi and its rivals DS Smith and Smurfit Kappa
falling 2.8%-4.5%, after Mondi reported a plunge in core
earnings due to lower sales volumes and pricing pressure.
Homewares retailer Dunelm slid 5.3%, after it
flagged a softer market, which partly led to 0.3% dip in the
FTSE 250.
After starting on the front foot on hopes that trade talks
scheduled for tomorrow and Friday would yield a breakthrough, a
report that Beijing has urged Washington to stop unreasonable
pressure on Chinese companies dragged the main index in to the
red.
A report that the U.S. was mulling a currency agreement with
China as part of a partial deal that could see a planned tariff
hike next week being cancelled had offered some respite to
markets, though a separate report said there was lack of
progress in deputy-level talks held this week.
"Ultimately, goodwill gestures are great but it doesn't
resolve the deep divides that clearly exist on certain issues,
which makes a deal in the foreseeable future unlikely," Oanda
analyst Craig Erlam said.
Amidst the trade angst and Brexit worries, the FTSE 100
formed a "Death Cross" pattern as its 50-day moving average
(DMA) crossed below the 200 DMA, a technical pattern that is a
warning sign that more losses are likely in the near term.
The blue-chip bourse last formed the pattern roughly a year
ago when Brexit negotiations and Italy's budget deficit had hit
risk appetite.
"The ebb and flow of sentiment around US, China trade
continues to pull global stock markets from pillar to post," CMC
Markets' Michael Hewson wrote.
Spirits company Diageo, British American Tobacco
and consumer goods firm Unilever, all of whom
book a major part of their earnings in the U.S. dollar, weakened
as sterling recovered.
However, luxury brand Burberry added 1.3% following
French rival LVMH's robust quarterly results despite
the Hong Kong protests.
Housebuilders edged higher, led by a 1.1% gain in Taylor
Wimpey, after a survey showed that a key headline house
price index figure rose to a three-month high in August, even as
broader uncertainties remain.
Small-cap fashion retailer N Brown jumped 7% after
a profit beat.
(Reporting by Muvija M and Shashwat Awasthi in Bengaluru;
Editing by Bernard Orr)
