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(Alliance News) - Stocks in London were lower at midday on Friday amid uncertainties over the US-China trade war following negative comments about China by the US.
US Vice President Mike Pence on Thursday criticised China for failing to live up to promises made on reining in intellectual property theft as well as raised other common US complaints about human rights violations in the country. China's government continues to "aid and abet" the theft of intellectual property, said Pence, speaking in Washington.
The Chinese Communist Party also continues to resist change, especially in its treatment of religious minorities and its stance on pro-democracy protests in Hong Kong, in ways that harm the potential for building a foundation for better ties with the US, he said.
The vice president also took aim at the US National Basketball Association saying the league was "acting like a wholly owned subsidiary" of China's Communist Party. Pence rebuked the NBA for "siding with the Chinese Communist Party and silencing free speech" over a tweet by Houston Rockets general manager Daryl Morey earlier this month which voiced support for demonstrations in Hong Kong.
China, a major basketball market, retaliated by ending sponsorships and cancelling broadcasts of two pre-season games held in the country. Chinese internet giant Tencent struck Rockets games from its programming schedule for the current NBA season.
In response, Beijing slammed Pence for his "arrogance and hypocrisy" on Friday following his negative comments.
Foreign ministry spokeswoman Hua Chunying said at a regular press briefing that the US should "cease expressing irresponsible opinions".
The FTSE 100 stock index was down 40.03 points, or 0.5%, at 7,288.22. The FTSE 250 was down 127.88 points, or 0.6%, at 20,024.27 and the AIM All-Share down 0.2% at 890.84.
The Cboe UK 100 index was down 0.5% at 12,364.81. The Cboe UK 250 was down 0.5% at 17,975.81 and the Cboe UK Small Companies up 0.1% at 11,227.70.
In mainland Europe, the CAC 40 in Paris was down 0.1% and the DAX 30 in Frankfurt was down 0.2%.
"Trade war sentiment has taken a turn for the worst, with Mike Pence coming out to criticise the Chinese as an aggressive and destabilising force. What began as an issue for Hong Kong's right for democracy and self-determination has now spilled into the wider corporate picture, with both the NBA and Nike coming in for criticism over their censorship in the bid to maintain Chinese funding. For markets this is simply another issue that could complicate or derail trade talks, with the Chinese largely combative when pressed by foreign powers on the Hong Kong issue," said IG Group's Josh Mahony.
On the London Stock Exchange, WPP was the best blue chip performer, up 5.9% after the advertising agency maintained its annual guidance for 2019 following an improved performance in the third quarter.
The advertising and public relations firm said third quarter reported revenue from continuing operations - excluding market research firm Kantar - was up 5.2% at GBP3.29 billion.
In mid-July, WPP agreed to sell 60% of Kantar to investment firm Bain Capital Private Equity, which valued all of Kantar at USD4.0 billion. The company also said that it intends to reorganise to separate the Kantar business from the wider WPP group, with completion expected in early 2020.
Looking ahead, WPP said its financial guidance remains unchanged, both including and excluding Kantar. WPP expects to deliver like-for-like revenue less pass-through costs down between 1.5% and 2.0% year-on-year.
Barclays was up 1.0% despite the lender posting a sharp drop in quarterly profit, as it took a mammoth payment protection insurance charge. However, this hit was partially offset by a strong performance from its sometimes maligned investment bank.
In the three months to September 30, the lender recorded pretax profit of GBP246 million, 83% lower than the GBP1.46 billion posted a year earlier. Excluding litigation and conduct charges, third-quarter pretax profit rose 18% to GBP1.81 billion.
The sharp quarterly drop was attributed to a GBP1.4 billion payment protection insurance provision.
More positively, Barclays Corporate & Investment Bank, which sits within Barclays International, recorded a profit of GBP882 million in the third quarter, 77% higher year on year and broadly flat compared to the previous quarter. The corporate loan book recorded 2.7% growth to GBP95.8 billion.
At the other end of the large cap index, Glencore was down 1.0% after the commodities house reported a dip in quarterly copper output, but cobalt production staged a rebound.
For the three months to September, copper output fell 4% to 1.0 million tonnes on the year prior, but cobalt output climbed 21% to 34,400 tonnes.
Glencore said the fall in copper production was due to a reshaping of operations at the Mutanda mine in the Democratic Republic of the Congo, a smelter shut-down for refurbishment at Mopani in Zambia, and the disposal and depleted of South American assets.
Cobalt production improved, Glencore said, following a ramp-up of operations at Katanga in the DRC.
The pound was quoted at USD1.2833 at midday, firm against USD1.2828 at the London equities close on Thursday.
In the latest Brexit development, EU ambassadors postponed a decision on how long to delay the UK's exit from the bloc until next week, diplomats said Friday after talks in Brussels.
The 27-member states agree in principle that Brexit should be delayed beyond the end of the month, but talks are ongoing about how much longer to wait.
The ambassadors agreed that the decisions could be made by written procedure, rather than an emergency leaders' summit, but their next meeting is on Monday or Tuesday.
After what EU negotiator Michel Barnier said were "excellent discussions", European Commission spokeswoman Mina Andreeva said "work will continue in coming days".
Two diplomats told AFP the ambassadors set an informal deadline of late Monday or early Tuesday to decide - just two days before the current Brexit deadine.
The euro stood at USD1.1116 at midday, flat against USD1.1100 at the European equities close Thursday.
In economic news from the continent, the climate for consumers in Germany remains depressed, GfK reported, with job losses also now beginning to bite.
GfK predicts a consumer climate value of 9.6 points for November, meaning a fall from the revised value for October of 9.8 points.
GfK said the consumer mood is less optimistic than in October. Aside from known issues such as slowing global economic growth, trade conflict and Brexit, job losses in Germany are beginning to hinder consumer confidence.
Stocks in New York were set for a flat to higher open, with the DJIA called flat, the S&P 500 index up 0.1% and the Nasdaq Composite up 0.2%.
Amazon.com shares were down 5.6% in pre-market trade after the e-commerce giant late Thursday posted third quarter earnings below expectations.
Diluted earnings per share of USD4.23 for the three months ended September 30, was down 8.4% versus the USD4.62 per share predicted by analysts and 26% lower than the USD5.75 EPS posted for the same quarter of 2018.
The weaker than expected performance was the result of Amazon's introduction of free one-day delivery to Prime customers.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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