April 6, 2018 / 9:11 AM / 5 months ago

Cyclicals suffer as new Trump tariff threat hits FTSE 100

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* FTSE 100 down 0.2 pct

* Cyclicals hit, utilities gain

* Shire extends gains

* M&S, Next hit by Citi downgrade

By Helen Reid

LONDON, April 6 (Reuters) - The latest salvo in a trade row between the U.S. and China weighed on Britain’s FTSE 100 on Friday, though the damage was limited as mining and bank stocks fell while utilities made gains.

President Donald Trump upped the ante by directing U.S. officials to consider tariffs on a further $100 billion of Chinese imports, and the FTSE 100 down 0.2 percent by 0830 GMT.

The dip hardly dented Thursday’s 2.4 percent gains, posted after Sino-U.S. tensions appeared to have eased, and the index stayed near a three-week high, suggesting investors are growing more confident that a full-blown trade war can be averted.

Mining and financials stocks, which have been especially sensitive to trade concerns, led losses once again.

Antofagasta, Glencore, Rio Tinto, BHP Billiton and Anglo American all fell, did HSBC and Barclays.

Shire shares rose 1.5 percent, holding near a three-month high, as hopes increased that Japan’s Takeda Pharmaceutical would make a bid for the rare disease specialist before an April 25 deadline.

Retailers were the worst performers on the FTSE 100 as downgrades from Citi sent Marks & Spencer and Next shares down 3.2 and 2.2 percent.

Strategists at the U.S. bank downgraded Next to a “sell” and M&S to “neutral”. In general retail, they said “investors should buy online over offline, Europe over UK and brands over retailers”.

Deutsche Bank shifted to a more positive view on general retail, arguing the strengthening of the pound would boost the European sector which makes a quarter of its sales in Britain.

Investors favoured defensive stocks such as utilities, tobacco companies and telecoms, sought after in volatile markets due to their solid cash-flow and dividends.

Centrica, United Utilities and SSE gained 1 to 1.8 percent. British American Tobacco was up 1.1 percent, while BT shares rose 0.8 percent.

Becoming the latest investment house to become relatively more positive on British stocks, UBS closed its overweight in euro zone equities relative to UK equities on Friday.

“Year-to-date euro zone equities have outperformed their UK counterparts by more than 4 percentage points, and we no longer see the catalysts for further outperformance,” wrote UBS Wealth Management’s Chief Investment Officer Mark Haefele.

On Thursday Citi had upgraded UK equities to “overweight”, saying recent underperformance and cheap valuations made the market attractive.

Reporting by Helen Reid; editing by John Stonestreet

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