(Alliance News) - The FTSE 100 ended Tuesday's session in the red, though pared some of the morning's steep losses on a report which signalled hope that tariffs set to hit China at the end of the week will be delayed.
The FTSE 100 index closed down 20.14 points, or 0.3%, at 7,213.76. London's index of large-caps had dipped as low as 7,137.84 during Tuesday's session.
The FTSE 250 ended down 141.55 points, or 0.7%, at 20,781.09, and the AIM All-Share closed down 4.74 points, or 0.5%, at 900.77.
The Cboe UK 100 ended down 0.2% at 12,233.31, the Cboe UK 250 closed down 0.6% at 18,732.38 and the Cboe Small Companies ended 0.1% lower at 11,390.60.
In European equities on Tuesday, the CAC 40 in Paris ended up 0.2%, while the DAX 30 in Frankfurt dipped 0.3%.
"A report in the Wall Street Journal helped ease the markets' trade concerns on Tuesday, though it wasn't enough to completely erase the session's losses. Investors spent much of the day fretting about the fact the week is yet to see any tangible 'phase one' progress between the US and China, despite the former readying itself to impose tariffs on another USD156 billion in the latter's goods," said Connor Campbell at Spreadex.
A ray of hope on Tuesday came from the WSJ, which reported that US and Chinese officials are working on a deal to postpone a round of tariffs set to hit Chinese imports in five days.
Officials on both sides say they now expect to continue talking past Sunday, when the tariffs are due to kick in, according to the paper.
"Though it is not the agreement the markets are so desperate for, a can-kick is better than nothing. Even if it does come with the knowledge that we have been here before, and it has only ever ended with the eventual imposition of the delayed tariffs," said Spreadex's Campbell.
For two months, the two sides have struggled to finalise a partial deal that Trump announced in October.
Statements by US officials have run hot and cold in recent days, with markets swooning last week after Trump said a deal could wait until after next year's elections. But Larry Kudlow, a top White House economic aide, said Friday a deal was "still close."
In other trade news from the Americas, the US, Mexico and Canada are expected to sign an "initial deal" Tuesday finalising the USMCA trade agreement, said Mexican President Andres Manuel Lopez Obrador.
"There is an initial deal between the governments," the leftist leader told his daily news conference as negotiators from the three countries prepared to meet in Mexico City. "Today it will be signed by... the three countries' negotiators."
Stocks in New York were stabilising at the London equities close, with the Dow Jones flat, the S&P 500 index also flat, and the Nasdaq Composite 0.2% higher.
In the UK, some disappointing economic growth data released in the morning was overshadowed by the upcoming general election.
The UK economy was stagnant in October, data from the Office for National Statistics showed, following two consecutive months of decline.
For the month of October alone, gross domestic product was flat on the month before. This followed falls of 0.1% and 0.2%, respectively, in September and August.
Consensus, according to FXStreet, was for growth of 0.1% in October.
These figures were unable to knock the pound off course ahead of an MRP - multiple-level regression and post-stratification - poll from YouGov out at 2200 GMT. It correctly forecast a hung parliament in 2017.
The poll published by YouGov nearly two weeks ago indicated that the Conservative Party could 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.
The pound was quoted at USD1.3176 at the London equities close Tuesday, higher compared to USD1.3154 at the close on Monday.
Meanwhile, the euro stood at USD1.1095 at the European equities close Tuesday, against USD1.1070 at the same time on Monday.
The single currency got a slight boost after some upbeat German sentiment data.
The ZEW indicator of economic sentiment for Germany rose to 10.7 points in December, a marked improvement from the minus 2.1 registered in November. This is the first time the index has been in positive territory since April, and marked the best reading since February 2018.
The indicator assessing the current situation in Germany improved to minus 19.9, from minus 24.7 a month ago.
In contrast to the pound and the euro, the yen fell back against the dollar on Tuesday. Against the yen, the dollar was trading at JPY108.70, higher compared to JPY108.59 late Monday.
In commodities, Brent oil was quoted at USD64.34 a barrel at the London equities close Tuesday from USD64.20 late Monday.
Gold was quoted at USD1,463.59 an ounce at the London equities close Tuesday against USD1,460.80 at the close on Monday.
In London, Ashtead dragged on the FTSE 100 as it ended the session 6.3% lower.
For the six months ended October 31, the FTSE 100-listed equipment rental firm posted a GBP660.2 million pretax profit, 8.2% higher than its GBP610.0 million profit a year before. This improvement stemmed largely from rental revenue, which was up 18% to GBP2.45 billion from GBP2.07 billion, lifting group revenue 19% to GBP2.68 billion from GBP2.25 billion.
According to Ashtead, its half-year revenue performance reflects "strong growth in the US and Canadian markets". However, investment in its Canadian business and "weakness in the UK" meant a more modest performance in terms of profit.
Rolls-Royce Holdings closed down 3.1% after reporting a non-executive director, who is a partner at the engine-maker's largest shareholder, has stepped down from the board.
Bradley Singer is a partner and chief operating officer of ValueAct Capital. Activist investor ValueAct holds just under a 9.5% stake in the FTSE 100 constituent.
San Francisco-based ValueAct starting building a stake in Rolls-Royce in 2015 following a slew of profit warnings by the jet engine and power turbine maker, becoming its largest shareholder that year. In 2017, ValueAct increased its stake to around 11% but in March this year cut it by 1.5 percentage points.
Wm Morrison Supermarkets closed down 2.9% after Kantar reported a fall in sales for the 12 weeks to December 1.
Morrisons saw its sales retreat 2.9% year-on-year to GBP2.80 billion, with its market share dipping to 10.1% from 10.5%, said Kantar.
Among other supermarkets, Tesco was the best performing of the largest grocers over the 12 weeks as sales fell by 0.8% to GBP7.54 billion a year ago and its market share declined to 27.3% from 27.6% last year. J Sainsbury also saw its market share drop, to 15.7% from 16.0%, and sales were down 1.1% to GBP4.35 billion.
Sainsbury closed down 1.2%, and Tesco 0.7% lower.
At the top of the mid-caps on Tuesday was Tullow Oil, finishing 16% higher as it staged a minor rebound from Monday's 72% slide.
The previous session's weakness had been sparked by a suspension of its dividend, a "reset" of future production guidance, and the resignation of Chief Executive Officer Paul McDade and Exploration Director Angus McCoss.
Elsewhere in London, Ted Baker shares sank after the retailer chopped its full-year guidance after disappointing Black Friday sales, suspended its dividend, and announced the immediate departures of both its executive chair and chief executive.
The stock closed down 14% at 346 pence on Tuesday, though at one point in the session touched a low of 257.60p. At the start of 2019, the stock traded above the 2,000p mark.
The once high-flying high street store chain downgraded its annual pretax profit guidance to a minimum GBP5 million and a maximum of GBP10 million. For the year ended this past January 26, the company had posted pretax profit of GBP50.9 million.
This followed "lower than anticipated margins and sell through" over November and the Black Friday period. The troubled firm expects difficult trading to continue in December and January.
Ted Baker is conducting a cost review in a bid to improve its efficiency and has temporarily suspended its dividend. The company said it will look to resume payment as soon as it is "appropriate to do so".
In the UK corporate calendar on Wednesday, there are annual results from Anglo-German travel firm TUI and interim results from transport operator Stagecoach.
In the economic calendar on Wednesday, there are US consumer prices at 1330 GMT followed by the Federal Reserve's interest rate decision at 1900 GMT.
By Lucy Heming; lucyheming@alliancenews.com
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