The FTSE 100 blue-chip stock index dropped more than 1% on Thursday, under pressure from results-driven falls in Shell and Lloyds and the latest tensions over the US-China trade situation. The main index ended 1.1% lower on its worst day in a month, lagging its European counterparts, while losses in the domestically focused FTSE 250 were capped at 0.5% in response to stronger sterling.
A report that Chinese officials have doubts over sealing a comprehensive long-term trade deal with the United States diverted attention away from the Fed's widely-expected interest rate cut. "This could easily turn out to be a ploy by Beijing to try and gain leverage over the US, but for now dealers are content to trim their equity positions," CMC Markets analyst David Madden said.
Aside from the trade uncertainty, losses among blue-chips were down to Shell, the index's most valuable company, which tumbled more than 4% after warning that uncertain economic conditions could slow its $25 billion share buyback. Homebuilder Crest Nicholson dropped 5.1% on the midcap index after warning that its annual profit could plunge by as much as a third.
Crest highlighted hits from weak consumer confidence and flattening prices as a result of Brexit nerves, and blue-chip housebuilders Persimmon, Barratt and Berkeley each lost about 1%. Lloyds shed 1.4% after missing market expectations for third-quarter arnings. Precious metals miner Fresnillo topped the main board with a near 3% rise, as investors turned to safe haven gold in response to the renewed US-China trade uncertainty.
The FTSE 100 has recorded monthly loss in October, only the third month this year it has done so, as a rally in sterling -mostly driven by the risk of a 'no-deal' exit subsiding - hurt shares in companies that are big exporters. But the mid-cap index marked its second straight month of gains. Gainers among the FTSE 250 were led by specialist media services firm Future Plc which jumped 11.3% to its highest since December 2000 following a proposed acquisition of UK-based print and digital magazine publisher TI Media. Shares in British Airways owner IAG and telecom group BT rose 2.2% and 1.4%, respectively, to outperform the main index after they reported earnings.
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