(Alliance News) - Stocks in London were in the red on Monday as caution lingers despite progress made in trade talks between the US and China at the end of last week.
The FTSE 100 index was 35.40 points lower, or 0.5%, at 7,211.68.
The FTSE 250 was off 198.14 points, or 1.0%, at 19,843.57, and the AIM All-Share was 0.1% lower at 868.22.
The Cboe UK 100 index was down 0.2% at 12,255.22. The Cboe UK 250 down 1.0% at 17,785.32 and the Cboe UK Small Companies was 3.58 points higher at 10,947.62.
In mainland Europe, the CAC 40 in Paris and DAX 30 in Frankfurt were 0.6% and 0.5% lower respectively.
On the London Stock Exchange, FTSE 250 cybersecurity firm Sophos Group surged 37% to 582.20 pence as it agreed to a takeover by Surf Buyer, a newly-formed vehicle owned by funds managed by private equity firm Thoma Bravo.
Surf Buyer will pay USD7.40 per Sophos share, or 583p. This is a 37% premium to Sophos's closing price in London of 425.5p on Friday in London.
The deal values Sophos at GBP3.01 billion, with an enterprise value of GBP3.11 billion when including its debt.
On the trading front, Sophos said momentum has been "encouraging" in the first half of its financial year ending March 2020, with billings growth at constant currency 9%.
In the FTSE 100, online grocer Ocado fell 3.8% as JPMorgan cut its rating on the stock to Underweight from Neutral. Utility SSE fell 2.0% as Societe Generale reduced it to Neutral from Outperform.
Back in the FTSE 250, engineer Senior rose 2.1% after Peel Hunt raised it to Buy from Hold. Gold-focused Hochschild Mining was up 1.6% as Berenberg raised it to Hold from Sell.
Iron ore pellet firm Ferrexpo fell 1.1% after it said it is aware of media reports surrounding Chief Executive Kostyantin Zhevago, but said no legal action has been taken against him and he "strongly denies" any wrongdoing.
Last week, Bloomberg reported Ukraine has added Zhevago to an international wanted list after he failed to report for questioning about former business commitments. He has been named as a suspect in absentia, Bloomberg continued, and investigators have begun court proceedings to find him.
Bloomberg said Ukrainian investigators believe he has committed "large-scale" money laundering and embezzlement.
US and Chinese trade negotiators on Friday reached agreement on some of the key US demands, including intellectual property and financial services, producing what US President Donald Trump called phase one of a "substantial deal".
In exchange, the US agreed to postpone a tariffs increase, from 25% to 30%, set to take effect on Tuesday on billions of dollars of imported Chinese goods.
Trump said the deal had been reached "in principle" and which still must be put onto paper and signed. But he stressed that it "fully covered" some of the US demands, including trade in agricultural goods, with China agreeing to increase purchases to as much as USD50 billion annually within two years from about USD8 billion currently.
China's imports and exports fell by more than expected in September, official data showed Monday, as cooling demand at home and abroad hit trade in the world's second-largest economy.
Globally, China's exports dropped 3.2% in September from the same period last year, while imports dived 8.5%, according to data from the customs administration.
The figures were worse than a Bloomberg forecast, which estimated exports to drop 2.8% and imports by 6.0%.
The EU has replaced the US as China's top trading partner amid a bruising tariffs spat, with imports from the US down 26% on-year in September.
Financial markets in Japan were closed on Monday for the Health & Sports Day public Holiday. In China, the Shanghai Composite closed up 1.2%, while the Hang Seng index in Hong Kong is 0.9% higher late on.
In the US on Friday, Wall Street ended higher. The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite finished up 1.2%, 1.1% and 1.3% respectively.
On the political front, UK Prime Minister Boris Johnson is coming under pressure to concede more ground to Brussels as hopes for an early breakthrough in the Brexit talks appeared to falter.
UK and EU officials will resume talks in the Belgian capital on Monday with the prospects of an agreement in time for Britain to leave with a deal on October 31 in the balance.
Time is rapidly running out if there is to be an agreement to put to EU leaders to sign off on at their two-day summit starting on Thursday.
The EU's chief negotiator Michel Barnier said "technical-level" talks between officials over the weekend had proved "constructive".
But in a briefing to ambassadors of the remaining EU27 on Sunday in Brussels, he said that "a lot of work remains to be done".
The pound was quoted at USD1.2581 early on, soft from USD1.2698 at the close Friday, having had a strong end to last week following potential Brexit deal progress.
"The pound saw a big rebound at the end of last week on optimism we could be on the cusp of a Brexit breakthrough as we head ever closer to the October 31 Halloween deadline. In the cold light of a break for the weekend, after last week's positive noises from Prime Ministers Johnson and Ireland's Varadkar, significant obstacles still remain particularly over what might be acceptable to the EU, may not be acceptable to the UK parliament and vice-versa," said Michael Hewson at CMC Markets UK.
"The weekend mood music from EU leaders appears to have gone some way to puncturing some of the optimism about the prospects for a quick solution seen at the end of last week. Talks look set to continue today, however, it is hard to see any other outcome than a delay to the October deadline, with the government forced to apply for an extension by the end of the week.
"What that means for the government of Boris Johnson by the end of this week, is anyone's guess, given his passionate refusal to countenance an extension," he added.
The economic calendar Monday has industrial production data from the eurozone at 1000 BST.
By George Collard; georgecollard@alliancenews.com
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