Banks, miners drag FTSE 100; Thomas Cook collapse lifts rivals

• US-China trade talks more than offset a rise in shares of travel operators and airlines after the collapse of Thomas Cook.
• The FTSE 100, whose constituents bring in more than two-thirds of their profits from abroad, saw its steepest monthly fall this year in August when trade tensions between the United States and China escalated.

London's FTSE 100 index shed early gains on Monday as losses in banks and miners due to a lack of clarity in US-China trade talks more than offset a rise in shares of travel operators and airlines after the collapse of Thomas Cook.

The FTSE 100 fell 0.6pc by 0830 GMT, while the FTSE 250 midcaps index shed 0.7pc, as mixed signals emerged from trade negotiations between the world's top two economies.

An index of banks slipped 2pc, dragged by Asia-facing financials, while the broader mining index  dipped 1pc.

The US Trade Representative's office said on Friday that US and Chinese deputy negotiators held "productive" talks in Washington, but markets were left underwhelmed after Chinese agriculture officials cancelled a trip to US farm states.

The FTSE 100, whose constituents bring in more than two-thirds of their profits from abroad, saw its steepest monthly fall this year in August when trade tensions between the United States and China escalated.

While the index has enjoyed the benefits of a weakness in pound for most of 2019 as a painful Brexit process plays out, recent steps by lawmakers in preventing a no-deal Brexit has brought gains for the currency and in turn weighed on exporters.

The FTSE 100 has gained just 8.4pc so far in the year, well behind its European counterpart's 15.1pc rise.

Helping limit Monday's losses were surges in tour operator TUI, airlines Ryanair, British Airways owner IAG and easyJet as traders bet the Thomas Cook bankruptcy would cut some overcapacity in the market.

"The effects will be felt across the sector, not all bad... airlines are firmer today as they should feel the benefit from the abrupt loss of short haul capacity," Markets.com analyst Neil Wilson said.

Marks & Spencer lost 4.5pc after it announced the abrupt departure of its chief financial officer.

AstraZeneca rose 1pc after its diabetes treatment Qtrilmet moved a step closer to European Union approval on Friday.