London midday: Stocks extend losses as ECB warns over trade war

The FTSE 100 was down 1.3% at 7,173.34, while the pound remained close to four-month lows, trading down 0.1% against the dollar at 1.2642 and flat versus the euro at 1.1335.

Worries about the trade spat between the US and China intensified after a Chinese official warned that products made from China's rare earth minerals should not be used against the country's development. The comment, reported by CCTV, was taken as a veiled threat aimed at the US, whose technology companies are dependent on the materials.

Spreadex analyst Connor Campbell said: "Given that the materials are used in everything from iPhones to missile guidance systems to electric cars, and that China’s mines account for around 70% of the globe’s output, the country may have found its not-so-secret weapon in the trade war."

The mood in financial markets soured further after the European Central Bank said in its latest Financial Stability Review that uncertainty about global economic growth prospects has contributed to bouts of high volatility in financial markets. It also warned that weaker-than-expected growth and a possible escalation of trade tensions could trigger further falls in asset prices.

In UK equity markets, industrial and engineering software provider Aveva was in the red even as it said full-year pre-tax profits rose 21.7% to £46.7m, driven by increasing demand for industrial software and good sales execution, including an increase in multi-year commitments from key customers.

Tesco lost ground as the latest data from Kantar showed that its market share fell to 27.3% from 27.7% in the 12 weeks to 19 May. Sainsbury’s and Asda’s market share also declined.

On the upside, Southend airport owner Stobart Group surged as it said it swung to an annual loss £58.2m from a profit of £100m the year before - partly due to legal costs - but posted a rise in revenue rose thanks to an improvement in its two core operating businesses and sounded an upbeat note on the outlook.

Experian fell as it announced the appointment of Mike Rogers, an independent non-executive director of the company, as its chairman with effect from the end of its annual general meeting on 24 July. He will succeed Don Robert.

Doorstep lender Provident Financial was also weaker after the Competition and Markets Authority said it was considering whether Non-Standard Finance's £1.3bn hostile takeover would result in a substantial lessening of competition. The watchdog also confirmed that NSF has offered to demerge its home credit business as part of the deal.

In broker note action, Diploma was initiated at ‘overweight’ by JPMorgan Cazenove, while Electrocomponents was started at ‘neutral’.

Serco was lifted to ‘outperform’ at RBC Capital Markets and Ultra Electronics was initiated at ‘hold’ by Jefferies.

Market Movers

FTSE 100 (UKX) 7,173.34 -1.32%
FTSE 250 (MCX) 19,001.46 -1.06%
techMARK (TASX) 3,471.57 -1.27%

FTSE 100 - Risers

Severn Trent (SVT) 1,975.50p 1.15%
National Grid (NG.) 820.30p 1.01%
Berkeley Group Holdings (The) (BKG) 3,545.00p 0.91%
Fresnillo (FRES) 744.60p 0.89%
United Utilities Group (UU.) 802.60p 0.88%
Vodafone Group (VOD) 128.16p 0.82%
Taylor Wimpey (TW.) 168.20p 0.39%
British Land Company (BLND) 531.30p 0.25%
Persimmon (PSN) 1,974.00p 0.13%
Sainsbury (J) (SBRY) 198.88p 0.06%

FTSE 100 - Fallers

NMC Health (NMC) 2,505.00p -4.39%
Ocado Group (OCDO) 1,153.00p -4.32%
Micro Focus International (MCRO) 1,894.80p -4.16%
Flutter Entertainment (FLTR) 5,642.00p -3.95%
British American Tobacco (BATS) 2,780.00p -3.69%
Hikma Pharmaceuticals (HIK) 1,674.00p -3.46%
Ashtead Group (AHT) 1,917.50p -3.01%
Tesco (TSCO) 231.20p -2.94%
Melrose Industries (MRO) 168.05p -2.92%
Anglo American (AAL) 1,898.80p -2.75%

FTSE 250 - Risers

Stobart Group Ltd. (STOB) 129.51p 10.32%
Galliford Try (GFRD) 593.00p 6.27%
Amigo Holdings (AMGO) 241.00p 2.99%
Fisher (James) & Sons (FSJ) 2,012.34p 2.46%
Diploma (DPLM) 1,502.00p 1.90%
F&C Commercial Property Trust Ltd. (FCPT) 121.40p 1.68%
Sanne Group (SNN) 680.00p 1.49%
Wizz Air Holdings (WIZZ) 3,153.00p 1.45%
Acacia Mining (ACA) 162.20p 1.37%
Pennon Group (PNN) 732.00p 1.16%

FTSE 250 - Fallers

Indivior (INDV) 45.35p -5.03%
Saga (SAGA) 43.02p -4.87%
Bakkavor Group (BAKK) 124.60p -4.59%
Funding Circle Holdings (FCH) 242.00p -4.16%
Ferrexpo (FXPO) 218.00p -4.01%
Cairn Energy (CNE) 163.20p -3.83%
Hunting (HTG) 511.50p -3.76%
Hastings Group Holdings (HSTG) 181.10p -3.67%
Weir Group (WEIR) 1,492.00p -3.40%
Entertainment One Limited (ETO) 437.40p -3.36%