(Alliance News) - Stocks in London ended mixed on Thursday, with the internationally-exposed FTSE 100 in the red amid fears US legislation supporting pro-democracy protesters in Hong Kong could derail trade talks with China.
China threatened retaliation against Washington on Thursday after US President Donald Trump signed legislation supporting Hong Kong pro-democracy protesters, just as the world's top two economies edge towards a trade truce.
Activists in the crisis-hit city hailed the move, saying it would help them pile pressure on Beijing-backed local authorities, and staged a "Thanksgiving" rally saluting Trump and US lawmakers.
Trump signed the legislation under heavy pressure from Congress, where it attracted rare bipartisan support, and in a statement spoke of his "respect" for Chinese President Xi Jinping, calling for both sides to "amicably settle their differences".
But Beijing lashed out furiously, summoning the US ambassador, threatening unspecified "firm countermeasures" and warning Washington not to implement the legislation.
"The nature of this is extremely abominable, and harbours absolutely sinister intentions," the Chinese foreign ministry said in a statement. "China strongly urges the US side to correct mistakes and change course," the ministry added.
The UK flagship index closed down 13.35 points, or 0.2%, at 7,416.43. The FTSE 250 ended up 69.23 points, or 0.3%, at 21,023.55, and the AIM All-Share closed up 3.72 points, or 0.4%, at 923.81.
The Cboe UK 100 ended down 0.2% at 12,565.67.64, the Cboe UK 250 closed up 0.5% at 18,902.11, and the Cboe Small Companies ended up 0.2% at 11,429.43.
In Paris the CAC 40 ended down 0.2%, while the DAX 30 in Frankfurt ended down 0.3%.
"Equity markets in Europe are lower today as traders fear that US-China trade relations could take a turn for the worst following President Trump's decision to back the Hong Kong bill. The US government has put its support behind the citizens of Hong Kong, so that is likely to attract a negative response from Beijing. The Chinese government will view this move by Mr Trump as an attempt to meddle in their internal affairs," said CMC Markets analyst David Madden.
"Progress has been made on the trade front recently but some of that might come undone on account of the Hong Kong bill. Volatility and trading volumes are low today as the US celebrates Thanksgiving, so the moves witnessed this afternoon aren't a great reflection of market sentiment," Madden added.
On the London Stock Exchange, Ocado Group ended the best blue chip performer, up 3.6% after the online grocer said it will build a mini customer fulfilment centre in Bristol to support growth plans of Ocado Retail.
The Bristol warehouse will have a capacity for over 30,000 orders per week compared to 85,000 orders per week expected from Ocado's fifth customer fulfilment centre, which is currently being built at Purfleet, Essex. The facility is being built in an existing warehouse, Ocado said, and is expected to go live at the end of 2020 or early 2021, bringing new capacity into operation significantly faster than for purpose-built standard-sized fulfilment centres.
The Bristol mini-centre, consisting of a 150,000 square feet warehouse, will be delivered by St Modwen Properties - itself down 0.4%.
Phoenix Group closed up 1.5% after the life and pensions consolidator said its cash generation for 2019 is ahead of target.
Phoenix said it has generated GBP707 million of cash in 2019, exceeding the upper end of its GBP600 million to GBP700 million target. In 2018, cash generation amounted to GBP664 million.
It also continued to meet, or exceed, customer service metrics, it said, and remains on track to deliver the GBP1.2 billion total synergy target for its Standard Life Assurance purchase.
At the other end of the large cap index, Vodafone ended down 3.9%, National Grid, down 2.9%, Severn Trent, down 2.2%. The stocks went ex-dividend meaning new buyers no longer qualify for the latest dividend payout.
Ashtead Group closed down 2.4%. HSBC downgraded the equipment rental company to Hold from Buy.
In the FTSE 250, Virgin Money UK ended the star performer, up 19% despite making the "difficult" decision to suspend dividend payments in the face of a "resilient" annual performance.
The challenger bank will not be returning any cash for its recently ended financial year due to PPI provisions, which amounted to GBP385 million in the fourth quarter.
More positively, net interest income nearly doubled to GBP1.51 billion from GBP851 million, with the net interest margin meeting guidance, coming in at 1.66%. Looking ahead, the firm sees a net interest margin between 1.60% and 1.65% for financial 2020, with underlying operating costs of no more than GBP900 million and a CET1 ratio of around 13%.
"Expectations were pitched fairly low heading into today's announcement so the company's solid if unspectacular performance across several metrics has been treated with a sigh of relief," said AJ Bell's Russ Mould.
"While the lack of a dividend is disappointing, given that many people invest in banks purely for income, it may also be prudent given that Virgin Money faced a big last minute surge in PPI claims and it also incurred larger than expected restructuring costs during the period," added Mould.
The pound was quoted at USD1.2904 at the London equities close, up from USD1.2872 at the close Wednesday, after a poll, which successfully predicted the hung parliament in the 2017 UK general election, suggested the ruling Conservative Party was on course to win a majority in next month's general election.
The closely watched YouGov multilevel regression and post-stratification poll showed that if the election was held on Thursday, the Conservative Party would win 359 seats, 42 more than they took in 2017. It would also take 43% of the vote, and in number of seats this would be its best performance since 1987.
Labour, meanwhile, is set to lose 51 seats, falling from 262 seats in 2017 to 211 now, and taking 32% of the vote, a nine percentage point decrease. This would be the party's worst performance in seats won since 1983, YouGov said, adding that the opposition is on course to not take any new seats.
Of the 76 Labour-held seats where it leads the Tories by fewer than 8,000 votes, Jeremy Corbyn's party is currently behind in 43 of them, according to the analysis.
Sterling spiked to USD1.2951 versus the greenback after the poll results were release on Wednesday evening.
It is worth noting, however, that the previous MRP poll was released just days before the general election of 2017, this year's poll has been released two weeks before the election.
The poll result comes as a leading economic think tank warned that neither Labour nor the Tories had put forward a "properly credible prospectus" in their general election manifesto spending plans.
The Institute for Fiscal Studies said it was "highly likely" that a Conservative government would end up spending more than their manifesto implied - meaning either taxes or borrowing would have to rise.
The euro stood at USD1.1002 at the European equities close, flat against USD1.1005 late Wednesday.
In economic news from the continent, consumer price inflation in Germany was unchanged on an annual basis in November, figures from Destatis showed.
Annually, Germany's consumer price index rose 1.1%, but fell 0.8% on a monthly basis. The readings missed analyst consensus estimates of 1.3% and negative 0.6% respectively. In October, the consumer price index rose 1.1% annually and 0.1% on a monthly basis.
Against the yen, the dollar was trading at JPY109.50, firm against JPY109.26 late Wednesday.
Brent oil was quoted at USD62.72 a barrel at the London equities close, lower than USD62.92 at the close Wednesday.
Gold was quoted at USD1,455.02 an ounce at the London equities close, flat against USD1,455.35 late Wednesday.
Financial markets in the US were closed on Thursday for the Thanksgiving holiday and will reopen on Friday for a half-day session.
The economic events calendar on Friday has Germany unemployment data at 0855 GMT, UK mortgage approvals at 0930 GMT and eurozone inflation and jobless figures at 1000 GMT.
The UK corporate calendar on Friday has a trading statement from Daily Mirror newspaper publisher Reach.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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