British stocks fell for a second straight day on Tuesday but the indexes ended well off their lows after U.S. President Donald Trump said he would speak with Chinese President Xi Jinping, sparking hopes of a de-escalation in the trade war.
The FTSE 100 ended 0.1% lower after falling as much as 0.7%. The domestically focussed mid-cap FTSE 250 also ended down 0.1%.
Energy stocks staged a turnaround, rising 0.8% as oil prices turned positive after top trade adviser Peter Navarro told a Politico Live event that Trump was set to speak with Xi later on Tuesday.
Shares of Vodafone fell most steeply on the benchmark index after the mobile group reported another deterioration in Germany, its biggest market, in the third quarter.
Diageo dropped as much as 1.6% after touching its lowest since Nov. 6, after the spirits maker withdrew its medium-term organic sales growth target as it took steps to try and mitigate the impact of U.S. tariffs on its tequila and Canadian whisky.
The beverages sector shed 1.3%.
Banknote printer De La Rue PLC hit a three-year high after receiving preliminary approaches from parties other than British financier Edi Truell’s consortium.
On the macroeconomic front, the Bank of England is expected to cut interest rates by 25 basis points on Thursday. On the same day, markets will get a reading of Britain’s PMI figures for January.
In global markets, the U.S. and China set financial markets on edge with tit-for-tat tariffs that raised the spectre of a broader, damaging trade conflict.
Overnight, Trump agreed to a 30-day pause on the 25% tariffs on Mexican and Canadian imports.
(Reporting by Pranav Kashyap and Medha Singh）
