LONDON MARKET CLOSE: Stocks Sold Off As Trade War Fears Amplify

LONDON (Alliance News) - Stocks in London ended deeply in the red on Thursday amid US-China trade war fears with both sides seemingly unwilling to give an inch, leading to investors becoming increasingly wary of the impact the trade dispute will have on the global economy.During a weekly briefly, Chinese Commerce Ministry spokesman Gao Feng said the Trump administration must "show sincerity and correct their wrong actions" if the US wants trade talks to continue."Negotiations can only continue on the basis of equality and mutual respect," Gao said, noting that China is closely monitoring developments and preparing a necessary response.US and China trade talks collapsed earlier this month as President Donald Trump followed through on a threat to raise tariffs on USD200 billion worth of Chinese goods to 25% from 10%.The Trump administration also blocked US companies from doing business with Chinese telecom giant Huawei but recently gave the company a 90-day reprieve. Furthermore, China has lodged "solemn" protests with the US over the "bullying" of Huawei, the Commerce Ministry said, as Japanese electronics company Panasonic said it would stop supplying some components to Huawei, joining a growing list of firms distancing themselves from the Chinese company.On Thursday, UK chip designer ARM Holdings said it would stop licensing its essential technology to Huawei.The FTSE 100 index closed 1.4%, or 103.15 points at 7,231.04. The FTSE 250 ended 1.4% lower, or 276.06 points, at 19,031.21, and the AIM All-Share closed down 0.9%, or 8.45 points, at 957.54.The Cboe UK 100 ended down 1.6% at 12,258.67, the Cboe UK 250 closed down 1.4% at 17,123.69, and the Cboe Small Companies ended down 0.3% at 11,763.15.In European equities, the CAC 40 in Paris ended and the DAX 30 in Frankfurt both ended down 1.8%.Stocks in New York were sharply lower at the London equities close, with the DJIA down 1.1%, the S&P 500 index down 1.0% and the Nasdaq Composite down 1.2%.IG Group's Josh Mahony said: "European and US stockmarkets have followed their Asian counterparts lower today, as the continued anxiety over US-China trade relations hurt sentiment. While China today called for US sincerity, the fact is that this recent breakdown in relations appears to be something that comes from both sides. "The US targeting of Huawei is unlikely to be the end of it, and the more ties are severed, the more Chinese and US firms will readjust to a norm which does not include one another. The Chinese are buying Russian soyabeans, Huawei is developing its own operating system to replace Android, and those firms that don't have the capacity to find new suppliers or customers will simply have to suffer."On the London Stock Exchange, HSBC Holdings ended among a handful of blue chip risers, up 0.3% after Goldman Sachs raised the Asia-focused bank to Buy from Neutral. At the other end of the large cap index, WM Morrison Supermarket ended the worst performer, down 5.8%, while DCC closed down 2.6% and Imperial Brands closed down 0.3%. The stocks went ex-dividend meaning new buyer no longer qualify for the latest payout. Oil majors also ended in the red, tracking spot oil prices lower, with BP down 2.9% and Royal Dutch Shell 'A' down 2.5% and Shell 'B', down 2.6%.Brent oil was quoted at USD67.75 a barrel at the equities close, down 4.7% to USD71.10 at the close Wednesday. The North Sea benchmark fell to an intraday low of USD67.50 a barrel in afternoon trade - its lowest level in two months. US crude oil inventories rose last week, hitting their highest levels since July 2017, the Energy Information Administration said on Wednesday, while industry data had also pointed to a surge in US crude stockpiles.In the FTSE 250, Mitchells & Butlers ended the best performer, up 11% after the restaurant and pub operator said it outperformed the market in the first half of its financial year, delivering both revenue and profit growth. For the six months ended April 13, the Harvester and All Bar One operator posted pretax profit of GBP75 million, up 8.7% from GBP69 million a year prior. Revenue rose 5% year-on-year to GBP1.18 billion from GBP1.13 billion, with like-for-like sales up 4.1% in the first half. Looking ahead, the company reported like-for-like sales in the past 33 weeks were up 3.8%. The pound was quoted at USD1.2662 at the London equities close, flat compared to USD1.2657 at the close Wednesday, amid chaos at the heart of the UK government.UK Prime Minister Theresa May's key Brexit legislation has been pulled from the Commons schedule, prompting speculation the UK prime minister is on the verge of quitting.Downing Street had insisted the second reading of the Withdrawal Agreement Bill would go before members of Parliament in the week beginning June 3, but it was not announced when the government set out the forthcoming Commons agenda on Thursday.May who will meet Graham Brady, chairman of the powerful 1922 Committee of Conservative MPs on Friday previously agreed to set out the timetable for the contest to replace her after a vote on her latest Brexit deal.However, this deadline looks to have been brought forward with the announcement she will meet Brady the day after the European elections vote in which the Tories are widely expected to be hammered by Nigel Farage's Brexit Party.As such, ING thinks the stage is now set for a Conservative party headship contest over the summer."The process, which could take two to three months to complete, would have two stages. Firstly, the field of nominees would be whittled down to the two most popular among Conservative MPs. Those shortlisted are then put to the party's membership to vote for their favoured candidate - and if recent polls are correct, former foreign secretary Boris Johnson is miles ahead of the competition," ING analysts said."It is widely perceived that he - as well as some of his competitors - would be much more open to a 'no deal' Brexit than May. This is one of the reasons why sterling has come under renewed pressure over recent days," the analysts added. The euro stood at USD1.1164 at the European equities close, firm against USD1.1156 late Wednesday, despite soft factory and services PMI reports from Germany and eurozone.Eurozone private sector growth remained subdued in May as manufacturing contracted further, survey data from IHS Markit showed Thursday.The composite output index rose marginally to 51.6 in May from 51.5 in April. The score was forecast to rise to 51.7. A reading above 50 indicates expansion.The weak PMI reading puts growth in the second quarter so far on a par with the lackluster gain seen in the first quarter and was among the lowest recorded since mid-2013, Markit said.Germany's composite output index rose unexpectedly to a three-month high of 52.4 in May from 52.2 in April. The score was also above the expected level of 52.0.The manufacturing PMI fell unexpectedly to 44.3 from 44.4 in April. The expected score was 44.8.At the same time, the services PMI dropped to a 4-month low of 55.0 from 55.7 in the previous month. The reading was forecast to fall moderately to 55.4."The euro was coming under increased pressure to break lower following the publication of further soft Eurozone data, with investors also dumping stocks, government bonds and commodities amid ongoing concerns over trade wars and slowing economic activity. Meanwhile, the first day of European Parliamentary Elections has begun with polls suggesting Marine Le Pen's National Rally party is leading Emanuel Macron in France, serving as a reminder that (far) right-wing politics is on the rise in Europe," said Forex.com analyst Fawad Razaqzada.Gold was quoted at USD1,285.30 an ounce at the London equities close, up from USD1,274.80 late Wednesday, amid trade war fears. The economic events calendar on Friday has Japan inflation readings at 0030 BST, UK retail sales numbers at 0930 BST and US durable goods orders at 1330 BST. The corporate on Friday has trading statements from events company Informa, precision instruments maker Spectris and thermal processing firm Bodycote. In addition, Mothercare will report annual results on Friday after the mother and baby products retailer delayed the release by a day due to the "complexity" of its financial year.