UKX FTSE 100 Index

By Carla Mozee, MarketWatch

EasyJet shares fall, WPP advances

Blue-chip stocks in the U.K. pulled back Monday, slipping for a second consecutive session, with concerns about global trade tensions weighing on sentiment.

How markets performed

The FTSE 100 index fell 0.3% to close at 7,655.79, led lower by consumer goods and basic materials stocks, but the telecom and health care sectors moved up. The index on Friday slipped 0.1% (http://www.marketwatch.com/story/ftse-100-edges-higher-as-pound-lingers-at-multimonth-lows-2018-07-20) but ended with its second straight weekly gain.

The pound traded at $1.3104, down from an intraday high of $1.3159 and down from $1.3132 late Friday in New York. The pound has recovered ground after last week's drop below $1.30 for the first time in 10 months after weak U.K. retail sales data spurred doubts that the Bank of England will raise interest rates at its Aug. 2 meeting.

Against the euro, the pound bought EUR1.1198 versus EUR1.1203 at last week's finish.

What drove the market

Finance ministers and central bankers of the G-20 group of countries ended their weekend meeting in Buenos Aires on Sunday warning that "heightened trade and geopolitical tensions" along with other factors pose as downside risks for global economic growth, which at this point "remains robust."

U.S. Treasury Secretary Steven Mnuchin told reporters in Buenos Aires that the European Union, China and Japan must remove tariffs and subsidies before the U.S. discusses trade agreements with those regions. Mnuchin also said "it's definitely a realistic possibility" that U.S. President Donald Trump will follow through on a threat to put tariffs on all $500 billion worth of Chinese imports into the U.S.

Read:G-20 makes little headway on settling global trade tensions sparked by U.S. tariffs (http://www.marketwatch.com/story/g-20-makes-little-headway-on-settling-global-trade-tensions-sparked-by-us-tariffs-2018-07-23)

European Commission President Jean-Claude Juncker will be in Washington on Wednesday to discuss trade issues with Trump.

Meanwhile, some bank stocks lost ground, with Berenberg saying "U.K. banks remain bruised," in a research note released Monday. "Actual and perceived risks from Brexit, politics and the economic outlook mean sentiment towards U.K. banks has rarely been lower," but greater differentiation between banks is possible. "Avoiding cyclically-exposed banks, in particular Lloyds, is essential," wrote analyst Peter Richardson.

What are analysts saying?

The G-20 meeting "did little to ease tensions. Instead, the U.S. backed its import tariffs and urged its allies to ease their barriers on U.S. products, a few days after the U.S. president said he was ready to impose tariffs on all goods imported from China," said Christina Parthenidou, investment analyst at XM.com, in a note.

"On Wednesday, all eyes will turn to Washington, where Trump and the President of the European Commission, Jean-Claude Junker, will meet to discuss on security and economic matters such as tariffs on metals and imported cars, with markets being interested to see whether Junker could achieve some progress in [trade] relations," wrote Parthenidou.

Stocks in focus

EasyJet PLC (EZJ.LN) fell 1.7% as rival budget air carrier Ryanair Holdings PLC (RYAAY) posted a 20% decline in first-quarter profit to EUR319 million, hurt in part by higher oil prices and pilot strikes. (http://www.marketwatch.com/story/ryanair-earnings-fall-on-rising-costs-2018-07-23)

"While we continue to actively engage with pilot and cabin crew unions across Europe, we expect further strikes over the peak summer period as we are not prepared to concede to unreasonable demands that will compromise either our low fares or our highly efficient model," said Ryanair in its earnings report.

WPP PLC (WPP.LN) climbed 3.1% as the world's biggest advertising company has held talks to sell a minority stake in its Chinese operations, according to Dow Jones Newswires, which cited a person familiar with the matter on a report published Saturday.

Ocado Group PLC (OCDO.LN), an online grocery delivery services and platform-technology provider, led advancers on the FTSE 100 by rising 5.5%.

Hargreaves Lansdown PLC shares (HL.LN) declined 1.9% following a ratings downgrade of investment firm to underperform at Jefferies.

BT Group PLC shares (BT.A.LN) rose 1.3% after the U.K. government outlined plans to boost full-fiber connectivity (http://www.marketwatch.com/story/uk-plans-to-boost-fiber-connectivity-2018-07-23), aiming to have coverage across the entire country by 2033. Off the main benchmark, shares of TalkTalk Telecom Group PLC (TALK.LN) gained 0.8%.

Among bank shares, Lloyds Banking Group PLC (LLOY.LN) fell 0.5%, but Royal Bank of Scotland Group PLC (RBS.LN) turned higher, ending up 0.1%. Berenberg said the benefits of the RBS's risk-focused strategy remains undervalued. Barclays PLC (BCS) lost 0.1%, while Asia-focused lenders ended mixed, with HSBC Holdings PLC (HSBA.LN) up 1% while Standard Chartered PLC (STAN.LN) fell 0.4%.

(END) Dow Jones Newswires

July 23, 2018 12:48 ET (16:48 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.