Oil stocks help FTSE 100 overcome trade tensions

LONDON (Reuters) – Britain's main stock index fell on Monday as trade tensions between the United States and China kept pressure on equity markets across Europe, weighing on multinational companies.

PHOTO OF THE ARCHIVE: A worker takes shelter from the rain while the London Stock Exchange pbades in the city of London at lunch time on October 1, 2008. REUTERS / Toby Melville

The FTSE 100 fell by 0 , 03 percent at its lowest level since May 30 but substantially outperformed other European stock markets. Germany's DAX, home to large auto stocks in the first line of the trade dispute, fell 1.4 percent, while the STOXX 600 fell 0.8 percent.

Strong energy reserves supported the FTSE 100, while a weaker pound also boosted the main export companies in the index.

U.S. President Donald Trump announced tariffs on 50 billion dollars of Chinese imports on Friday, establishing a list of more than 800 imports that include cars that would be subject to a tariff of 25 percent from July 6.

China said it would respond with tariffs "of the same scale and force" and that any previous trade with Trump was "invalid".

Multinational consumer stocks, vulnerable to higher trade barriers, were the worst performers, with heavyweights Diageo, Reckitt Benckiser and British American Tobacco.

Oil stocks opened lower, but jumped into positive territory, as oil prices retreated before the OPEC meeting on Friday and are expected to increase production. [nL4N1TK18A]

Crude was falling before after China threatened tariffs on US oil imports.

Major oil companies BP and Royal Dutch Shell went from the strongest resistance to the biggest boost to the index, increasing between 1.2 and 1.3 percent at the close.

Petrofac mid-cap petroleum services firm fell 1.3 percent, on a negative note from Morgan Stanley.

The broker's badysts said the focus of the market was whether Petrofac had sufficient liquidity to pay a bond of 677 million dollars in October or if additional capital would be required.

Sterling weakened, helping to support the FTSE, as traders pared positions in the currency before a Bank of England policy meeting this week and another parliamentary confrontation over the government's Brexit plan.

Ocado shares fell to their lowest level in ten days, 7.8 percent, on the first trading day of the online store in the FTSE 100.

The promotion means that the funds of Index tracking is forced to buy the stock, but Ocado has already risen 162 percent this year.

Bookmaker GVC rose 2.3 percent on its first day of trading.

In the latest news, the medium-sized bank CYBG has signed an agreement to acquire Virgin Money for 1,700 million pounds, creating the sixth largest bank in Great Britain by badets.

Virgin Money shares initially rose more than 2 percent, before reversing course to end the day with a 2.2 percent decline. CYBG shares fell 0.7 percent.

Also among medium-sized companies, Cobham shares rose 4.5 percent after Morgan Stanley updated the defense stock to "overweight" of "equal weight."

"We believe that the current management has stabilized the performance, with the necessary costs sunk and the measures taken to help the operational delivery," they wrote.

"With multi-year upcycles starting in the central defense and aerospace markets, and other niche exposures that appear to be on or near the base, we see a consensus underpinned."

Shares in the Indivior pharmaceutical rose 1.6 percent after a US court granted a temporary restraining order that prevented Dr. Reddy & # 39; s Laboratories from launching a generic version of opioid addiction treatment best-selling company.

He was still far from recovering his losses since Friday when he fell 27 percent on fears of a generic release.

In general, British stocks have performed well in recent weeks, and badysts have improved earnings expectations.

(Graph: FTSE Analysts Earnings – reut.rs/2JLXIZS)

Reports by Helen Reid; edition of John Stonestreet


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