LONDON MARKET OPEN: FTSE Flat As China Promises To Retaliate On Trade

LONDON (Alliance News) - Stocks in London saw a cautious start to trading on Friday amid renewed trade war fears souring investor sentiment, as Rolls-Royce led the blue chips after sticking to its guidance.China promised to retaliate after a newspaper reported that US President Donald Trump has already approved tariffs on USD50 billion worth of Chinese products."If the US side adopts unilateral measures of protectionism and damages China's interests, then we will respond right away and take necessary measures to resolutely safeguard our own legitimate rights and interests," Chinese Foreign Ministry spokesman Geng Shuang told journalists.All trade deals negotiated by the two parties will not take effect if the US adopts tariffs, Geng added.The FTSE 100 index was up 1.81 points, at 7,767.60 early Friday. The mid-cap FTSE 250 index was down 0.5%, 109.31 points, at 21,214.89. The AIM All-Share index was flat at 1,105.37The Cboe UK 100 was down 0.1% at 13,188.53, the Cboe UK 250 was down 0.3% at 19,464.93, and the Cboe UK Small Companies was flat at 12,919.65."Opening almost unchanged, the FTSE is teasing a fresh 3-week high, and could well strike 7,800 if things go its way this Friday. But it appears that losses in its commodity sector are preventing the UK index from indulging in the sight of a weakened pound," said Spreadex analyst Connor Campbell.On the London Stock Exchange, Rolls-Royce Holdings was the standout blue-chip performer at the open up 10%, after the jet engine maker laid out its cash flow and return targets.Rolls-Royce, which is holding its capital markets day Friday, said it is targeting to exceed GBP1 per share of free cash flow generation and a cash flow return on invested capital of 15% in the medium term. In 2017, free cash flow generation stood at 15 pence, while return on invested capital was 9%.The company also said that it is well-placed to now exceed free cash flow of GBP1 billion by 2020.The London-headquartered company also said that it will incur additional GBP100 million cost relating to in-service issues with its Trent 1000 Package C and B engines due increased level of inspection and intervention. It has implemented a number of short-term cost savings actions separate to the new restructuring plan announced on Thursday to offset the increased costs.Rolls-Royce has retained its 2018 free cash flow guidance of around GBP450 million, up or down GBP100 million.On Thursday, Rolls Royce said that over the next 24 months, it expects its proposed restructuring will lead to the reduction of approximately 4,600 roles. The stock closed up 6.5% on Thursday and has risen around 19% since the start of the week. Tesco was up 2.2% after the UK's largest supermarket chain said its growth plans remain on track, as it posted like-for-like sales growth for the tenth straight quarter.For the first quarter ending May 26, group like-for-like sales growth accelerated to 1.8% compared to 1.0% in the first quarter last year. UK & ROI like-for-like sales growth was 3.5%, compared to 2.2% a year prior.Tesco also said it gained positive trading momentum from its acquisition of wholesaler Booker Group, which delivered like-for-like sales growth of 14.3% including tobacco and 12.4% growth excluding tobacco, driven by a strong underlying performance and new business wins.InterContinental Hotels Group was up 2.0% after JPMorgan upgraded the Holiday Inn and Crowne Plaza hotel chains owner to Neutral from Underweight. In the FTSE 250, Superdry shares were up 2.3% after Liberum raised the high-street fashion retailer to Buy from Hold.At the other end of the midcap index, Indivior was down 15% amid rival competitors gaining approval from US regulators for their anti-addition treatments. The US Food & Drug Administration approved the first generic versions of Suboxone sublingual film for the treatment of opioid dependence.US pharmaceutical company Mylan Technologies and India's Dr Reddy's Laboratories received approval to market buprenorphine and naloxone sublingual film in multiple strengths. Buprenorphine and naloxone sublingual film should be used as part of a complete treatment plan that includes counseling and psychosocial support.In mainland Europe, the CAC 40 in Paris was up 0.5% while the DAX 30 in Frankfurt was up 0.4% early Friday.Ahead in the economic events calendar there are inflation readings from Italy and the eurozone at 0900 BST and 1000 BST respectively. The euro was lower against the dollar, quoted at USD1.1570 against USD1.1639 at the European equities close Thursday, after dovish remarks from the European Central Bank's policy meeting on Thursday. ECB President Mario Draghi acknowledged that interest rates are likely to remain unchanged through summer 2019 amid rising economic uncertainty.The Governing Council expects interest rates to remain unchanged at least through the summer of 2019 and in any case for as long as necessary to ensure that the evolution of inflation remains aligned with the expectations of a sustained adjustment path, Draghi said at the press conference.The ECB plans to start exiting its massive quantitative easing by the end of this year, despite strong headwinds clouding the outlook for the single currency economy.In addition, the euro area growth forecast for 2018 was cut to 2.1% from 2.4%, although the GDP outlook for 2019 and 2010 were kept unchanged at 1.9% and 1.7%."The Governing Council anticipates that, after September 2018, subject to incoming data confirming the Governing Council's medium-term inflation outlook, the monthly pace of the net asset purchases will be reduced to EUR 15 billion until the end of December 2018 and that net purchases will then end," the central bank said in a statement on Thursday.Sterling was lower quoted at USD1.3239 against USD1.3341 at the London equities close Thursday. In domestic political news, UK Prime Minister Theresa May is facing another parliamentary bust-up over her flagship Brexit legislation after a compromise designed to keep critics in her own party on board was denounced as "unacceptable" by Tory Remainers.The move was branded "sneaky" by one backbencher while another senior pro-EU Tory said the wording of a Government amendment was changed at the last minute to deny MPs the chance of blocking a "no deal" Brexit.A senior minister was forced to deny having lied to pro-EU Conservatives about the plan, which was signed off by the prime minister.Peers are to vote on Monday on a proposal to give MPs the power to dictate the government's response if it fails to reach a deal with Brussels as a potentially bloody round of "parliamentary ping-pong" gets under way.The Japanese Nikkei 225 index ended up 0.5%. In China, the Shanghai Composite is down 0.7%, while the Hang Seng index in Hong Kong is down 0.1%.The Bank of Japan decided on Friday to keep its current policy of aggressive monetary easing measures to overcome deflation and stimulate the world's third-largest economy.Months after Shinzo Abe took office as premier in December 2012, the bank launched a monetary easing campaign to achieve an inflation target of 2% within two years. But inflation rates have been far off the goal, amid stagnant wages and falling oil prices.The bank said inflation is in the range of 0.5% to 1.0% with inflation expectations "more or less unchanged."The Bank of Japan's decision comes two days after the US Federal Reserve raised its benchmark interest rate to a range of 1.75% to 2.00% and a day after the ECB announced its own plans to reduce stimulus.