London midday: Stocks extend losses as sterling pops higher

The FTSE 100 was down 0.7% at 7,349.54, while the pound was trading near a three-week high against the greenback, up 0.2% at 1.2749, and 0.3% firmer versus the euro at 1.1262. The currency was lifted by comments from blond bombshell and Tory leadership frontrunner Boris Johnson, who said earlier that he is not aiming for a no-deal Brexit.

Neil Wilson, chief market analyst at Markets.com, said: "These warm words calmed some nerves that have been on edge on fears he may strike a more Raab-like hawkishness over Brexit.

"It’s of course all fairly meaningless electioneering that will have very limited impact on the real outcome - the EU says it won’t renegotiate, whilst Parliament won’t allow a no-deal Brexit. But with Boris the favourite to become the next PM, the market is listening to what he says, producing some gyrations in sterling crosses."

The downbeat tone in equity markets came after US President Trump said on Tuesday that he was personally holding up a trade deal with China and that he won’t finalise an agreement unless Beijing returns to terms negotiated earlier in the year. Meanwhile, China said it was ready to respond if Washington escalates trade tensions further.

Spreadex analyst Connor Campbell said that while Trump's "comment sat at the less aggressive end of the trade rhetoric spectrum, it was still enough to cast a smidge of doubt on the market’s recent rebound".

Investors were also digesting the latest data out of China, which showed that consumer price inflation rose to a 15-month high of 2.7% in May from a year ago as food prices spiked on the back of high pork prices. The data was in line with economists' expectations.

In equity markets, British American Tobacco was the worst performer on the top-flight index even as it reaffirmed full-year expectations with constant currency revenue growth in the mid-upper half of long-term guidance range of 3-5%.

IG market analyst Chris Beauchamp said: "British American Tobacco had rallied hard into today’s trading update, so the ‘steady as she goes’ message was unlikely to inspire short-term traders to hold on to their positions. Having declared that the second half will see new products come to the rescue, the firm has set a very high bar for itself, which might come back to haunt them in due course."

Shares in guarantor loans lender Amigo Holdings slumped after the company's biggest shareholder, Richmond Group, said it was mulling the sale of some of its stock. The venture capital firm said in a statement that it had been "investigating" a potential sale of part of its shareholding of about 61.4% in a placement, but has decided not to proceed with a sale right now. However, the group said it "continues to actively consider selling some shares in Amigo".

Auto Trader was under pressure on the back a downgrade to 'sell' from 'neutral' at UBS, while over-50s specialist Saga retreated after it announced the retirement of chief executive officer Lance Batchelor after six years at the company. Saga shares had risen sharply on Tuesday after it announced a savings partnership with Goldman Sachs' savings arm, Marcus.

In other broker note action, Metro Bank was boosted by an upgrade to 'neutral' at Macquarie, while Petrofac was lifted to 'neutral' at Redburn and Antofagasta was bumped up to 'hold' at Liberum.

Market Movers

FTSE 100 (UKX) 7,349.54 -0.66%
FTSE 250 (MCX) 19,239.10 -0.45%
techMARK (TASX) 3,603.72 0.10%

FTSE 100 - Risers

Fresnillo (FRES) 804.20p 2.11%
Ferguson (FERG) 5,262.00p 1.98%
Next (NXT) 5,696.00p 1.24%
Rightmove (RMV) 587.00p 1.21%
Informa (INF) 806.60p 0.88%
Relx plc (REL) 1,892.00p 0.77%
Smith & Nephew (SN.) 1,695.50p 0.71%
Just Eat (JE.) 624.00p 0.71%
DCC (DCC) 6,990.00p 0.63%
Compass Group (CPG) 1,868.00p 0.62%

FTSE 100 - Fallers

British American Tobacco (BATS) 2,920.50p -4.90%
Standard Chartered (STAN) 682.40p -2.74%
BP (BP.) 543.00p -2.51%
Auto Trader Group (AUTO) 591.20p -2.44%
CRH (CRH) 2,500.00p -2.38%
Johnson Matthey (JMAT) 3,125.00p -2.13%
Smurfit Kappa Group (SKG) 2,285.00p -1.89%
Burberry Group (BRBY) 1,774.50p -1.83%
Standard Life Aberdeen (SLA) 274.70p -1.65%
Prudential (PRU) 1,617.00p -1.49%

FTSE 250 - Risers

Kier Group (KIE) 178.16p 5.86%
Hochschild Mining (HOC) 174.94p 4.38%
Just Group (JUST) 51.05p 3.55%
Entertainment One Limited (ETO) 387.80p 3.36%
Lancashire Holdings Limited (LRE) 728.50p 2.90%
EI Group (EIG) 204.80p 2.40%
Stobart Group Ltd. (STOB) 108.80p 2.06%
Greencore Group (GNC) 212.70p 1.87%
Centamin (DI) (CEY) 101.44p 1.81%
Dechra Pharmaceuticals (DPH) 2,834.00p 1.65%

FTSE 250 - Fallers

Amigo Holdings (AMGO) 264.50p -9.42%
Provident Financial (PFG) 469.60p -6.16%
Premier Oil (PMO) 70.48p -6.00%
Saga (SAGA) 38.12p -4.75%
Tullow Oil (TLW) 196.80p -4.51%
IP Group (IPO) 71.90p -4.13%
Contour Global (GLO) 205.00p -3.76%
Wood Group (John) (WG.) 393.90p -3.74%
GVC Holdings (GVC) 613.00p -3.53%
Cairn Energy (CNE) 144.00p -2.96%