(Reuters) – China’s warning of difficult times ahead due to its trade dispute with the United States led Britain’s FTSE 100 into the red, while mounting Brexit worries sank the pound and hit the mid-cap index.
The FTSE 100 was down 0.6%. The FTSE 250 lost 1.1% and hit its lowest since March 29, when Britain was originally scheduled to leave the European Union.
All but one sector on the main index was trading negative by 0809 GMT. The unresolved trade tensions took their toll, with financials, oil majors and mining shares all contributing to the fall.
“Whatever relief was generated by the announcement of a 90-day grace period earlier in the week has completely dissipated as investors fret over the damage this nascent tech Cold War is doing, Spreadex analyst Connor Campbell said.
A survey of domestic tourists by Barclays showed that more Britons would opt for “staycations” this year over heading for trips abroad, with 18% of them citing the impact from Brexit to travel and finances.
This hurt tour operator TUI, which fell 4.7% to the bottom of the FTSE 100. Shares of easyJet shed 2%, IAG lost 1%, while small-cap Thomas Cook tumbled 6.5%.
Ex-dividend trading further blemished the main index with Morrisons, Bunzl and DCC among major fallers.
The FTSE 250 struggled as the local currency was depressed after Prime Minister Theresa May’s new Brexit gambit backfired, fuelling further calls for her to quit, leaving the fate of the country as uncertain as ever.
“For sterling it will depend entirely on what, or rather who, is next. In the interim we should expect volatility in sterling crosses to remain elevated,” Markets.com analyst Neil Wilson said.
Still, mid-cap outsourcing firm Serco jumped 9%, on course for its best day in more than five months, after saying it would buy U.S. Navy supplier Alion’s Naval Systems Business Unit.
Madame Tussauds-owner Merlin Entertainments advanced 4.5% after hedge fund ValueAct urged it explore a go-private deal, claiming the move could boost the company’s value by around a third.
(Reporting by Shashwat Awasthi and Yadarisa Shabong in Bengaluru; Editing by Janet Lawrence)