August 31, 2018 / 9:30 AM / a year ago

Stronger sterling and trade war angst hit FTSE, Whitbread soars

LONDON (Reuters) - Britain’s top share index fell on Friday and ended the month with its biggest loss in three years as a stronger pound and broader worries over an escalation in a trade war between the United States and China dented appetite for UK stocks.

Signage is seen outside the entrance of the London Stock Exchange in London, Britain. Aug 23, 2018. REUTERS/Peter Nicholls

The blue-chip FTSE 100 .FTSE was down 1.1 percent at 7,432.42 points at its close as cyclical sectors fell, while mid caps .FTMC were flat in percentage terms.

Poor sentiment over trade hit stock markets across Europe, weighing on more volatile sectors, such as financials and commodity stocks.

Reports that U.S. President Donald Trump was planning new tariffs on China ramped up the trade dispute between the world’s two largest economies.

Closer to home, Trump rejected an offer from the European Union to eliminate tariffs on cars and said the EU’s trade policies were “almost as bad as (those of) China”, a media report said.

“European stocks have limped into the end of a disappointing month in the wake of last night’s comments from President Trump that the EU needs to do much more to come to an agreement with the US on trade,” Michael Hewson, chief market analyst at CMC Markets UK, said.

Oil majors BP (BP.L) and Royal Dutch Shell (RDSa.L) were both down around 1.7 percent as the price of oil fell. [O/R]

Likewise, a weaker copper price was a drag on heavyweight miners. Shares in Glencore (GLEN.L), BHP Billiton BLT.L, Rio Tinto (RIO.L) and Anglo American (AAL.L) all fell between about 0.8 percent and 2.9 percent. [MET/L]

However, Whitbread’s (WTB.L) shares were standout gainers.

They soared more than 14 percent to hit their highest level since December 2015 after agreeing to sell the group’s Costa coffee chain to Coca-Cola Co (KO.N) for $5.1 billion.

“As changes of direction go, the announcement by Whitbread CEO Allison Brittain that the company is selling Costa to Coca-Cola... rather than the plan announced in April to spin it off and list it as a publicly traded company is one deserving of kudos,” Northern Trust Capital Markets analyst Oliver Sherman said.

Among fallers, Sage Group (SGE.L) dropped nearly 8 percent after announcing the departure of its CEO.

More broadly, a stronger pound also weighed on the FTSE’s dollar-earning constituents for a third session. The currency remained close to a one-month high, boosted by hopes of a breakthrough on Brexit following comments from the European Union’s chief Brexit negotiator Michel Barnier this week.

The FTSE 100 ended August with a 4.1 percent loss, its biggest monthly loss since August 2015 as worries over a possible “no-deal” Brexit nagged.

Reporting by Kit Rees; Editing by Louise Ireland

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