LONDON MARKET CLOSE: Stocks Up As Investors Shrug Off New Trade Barbs

LONDON (Alliance News) - Stocks in London ended higher on Thursday rebounding from the sharp sell off on Wednesday, as investors turned a blind eye to the latest response from China in its ongoing trade spat with the US. As Beijing threatens the US with the possibility of a rare earths export ban, Chinese state media has sent an ominously worded warning to Washington: "Don't say we didn't warn you."A senior Chinese diplomat said Thursday that provoking trade disputes is "naked economic terrorism", ramping up the rhetoric against the US.US President Donald Trump and Chinese President Xi Jinping are expected to meet at the G20 summit in Japan next month.Trump is likely to follow through on his threat to impose additional tariffs on China if they fail to reach a deal on the sidelines of the summit.Nancy Curtin, chief investment officer at Close Brothers Asset Management, said: "Observers had been optimistic that the trade discussions would deliver a positive outcome, but this is now being re-assessed. The decision by Trump to use Huawei as a bargaining chip only ratchets up the tension. It will almost surely have longer-term ramifications. "The company is the largest Chinese exporter in the tech sector, championed by the government. China will be determined to not leave itself so vulnerable to such political pressure again and is likely to focus on building robust domestic supply chains. The impact of such a move will not be limited to the US. Only time will reveal the real impact of this president's combative approach to trade."The FTSE 100 index closed up 32.86 points, or 0.5%, at 7,218.16.The FTSE 250 ended up 165.40 points, or 0.9%, at 19,111.51, and the AIM All-Share closed up 4.99 points, or 0.5%, at 961.78.The Cboe UK 100 ended up 0.6% at 12,243.13, the Cboe UK 250 closed up 0.8% at 17,183.49, and the Cboe Small Companies ended down 0.1% at 11,806.84.In Paris the CAC 40 and the DAX 30 in Frankfurt ended up 0.5%. "Stock markets are largely higher today, but the move feels hollow as political and economic relations are still strained. Today is the sunshine after the rain, but the dark clouds are unlikely to be gone for good. Beijing took their time before hitting back at the US, but the threat to reduce rare earth mineral exports to the US was a big step up in trade tensions," said CMC Markets analyst David Madden. In the FTSE 100, National Grid ended the worst performer, down 4.4%, while Marks & Spencer closed down 4.1%. The stocks went ex-dividend meaning new buyers no longer qualify for the latest payout. Johnson Matthey closed down 4.3% after the speciality chemicals firm said growth will be slower next year due to plans for significant investment. "We anticipate that these investments for growth and efficiency will lead to a slightly lower margin than in 2018-19," the company said. Johnson Matthey reported 53% growth in pretax profit to GBP488 million in the financial year that ended on March 31 compared to GBP320 million reported the year earlier, as revenue rose 4.6% to GBP10.75 billion from GBP10.27 billion. Profit was slightly short of market expectations. According to company-compiled consensus figures for financial 2019, pretax profit was expected to jump 56% to GBP500.7 million. The group declared a final dividend of 62.25 pence a share, taking the total payout for the year to 85.5p, up 6.9% from 80.0p paid the year before. Looking ahead, Johnson Matthey said it expects foreign exchange movements in the financial year to the end of March 2020 to hurt sales and underlying operating profit by GBP6 million and GBP2 million, respectively.In the FTSE 250, Tullow Oil closed up 3.8% after Goldman Sachs promoted the oil and gas company to its Conviction Buy List.The US bank said the oil and gas company's exploration in Guyana is a key catalyst to drive the stock higher. FirstGroup closed up 3.6% after the transport company buckled under investor pressure and revealed plans to sell its Greyhound coach business in the US and spinoff UK bus business. FirstGroup said it would sell its troubled Greyhound North American intercity bus business, as the unit struggles to compete with growing pressure from low cost airlines.The pound was quoted at USD1.2606 at the London equities close, compared to USD1.2616 at the close Wednesday. Sterling hit an intraday low of USD1.2581 in afternoon trade - its lowest level since January. Meanwhile, Bank of England Deputy Governor Dave Ramsden said he was more pessimistic on the UK economic growth forecast than the central bank, and cautioned that a "no-deal, no-transition" Brexit would be the biggest risk to the economy.Ramsden said he was more pessimistic on GDP growth forecast than his colleagues on the Monetary Policy Committee. The policymakers sees more downside risks to productivity and is less optimistic about the recovery in investment.Moreover, a Brexit outcome of no deal and no transition is unarguably the biggest risk to the UK economy and financial stability, he said. However, if the UK exits the bloc in an orderly fashion, then BoE will raise interest rates to contain inflationary pressure.The UK is scheduled to leave the EU on October 31. The euro stood at USD1.1134 at the European equities close, flat against USD1.1127 late Wednesday.Stocks in New York were marginally higher at the London equities close as investors pick up stocks at reduced levels following the sell off on Wednesday, which saw the Dow hit its lowest level in three-month. The DJIA was flat, the S&P 500 index up 0.2% and the Nasdaq Composite up 0.3%.Moreover, a rebound by treasury yields has also contributed to the upward move, with the yield on the benchmark ten-year note bouncing off its lowest levels since September 2017.The recent decline by treasury yields has led to concerns about the outlook for the economy and the possibility of a recession.On the economic front, a report from the Commerce Department showed US economic growth in the first quarter accelerated by slightly less than initially estimated.The Commerce Department said real gross domestic product surged up by 3.1% in the first quarter, reflecting a slight downward from revision from the previously reported 3.2% increase.The downwardly revised increase in GDP, which matched economist estimates, still represented a notable acceleration from the 2.2% growth seen in the fourth quarter of 2018."The trade war has impacted US producers in much the same way as the prospect of a no-deal Brexit affected the behaviour of UK firms. Stockpiling and frontloading purchases has been a common feature for US producers as they seek to mitigate the detrimental impact of the US-China tariffs. However, with stockpiling having helped provide a short-term boost to US growth, the worry is that we will see a significantly lower rate of growth once that trend is reversed," said IG Group's Josh Mahony. Brent oil was quoted at USD67.50 a barrel at the equities close, lower than USD68.88 at the close Wednesday.Oil prices were lower amid concerns that a prolonged US-China trade war will likely hurt global economic growth and trigger a slowdown in fuel consumption.Gold was quoted at USD1,288.70 an ounce at the London equities close, up from USD1,281.50 late Wednesday.The economic events calendar on Friday has Italy GDP and inflation data at 0900 BST and 1000 BST respectively and UK mortgage approvals numbers at 0930 BST. In the afternoon there are Germany inflation readings at 1300 BST and US personal consumption expenditure figures at 1330 BST - the core reading is the Federal Reserve's preferred gauge of inflation. The UK corporate calendar on Friday has annual results from eastern Europe-focused airline Wizz Air Holdings, wealth manager Charles Stanley Group and car dealer Caffyns.