By Emily Horton

Trade concerns return to haunt resource stocks

London stocks fell Tuesday amid concerns over the details of a trade truce between the U.S. and China, and as the pound surged after a European court official said the U.K. can legally overturn Brexit.

Banks, tobacco and mining stocks led the decliners.

How are the markets performing?

The FTSE 100 fell 0.8% to 7,003.21, after Monday's gain of 1.2%.

The British pound soared to $1.2800 from $1.2723 late Monday in New York.

What is driving stocks?

Although the overall impact of the trade truce between the U.S. and China remains positive, questions over what was actually agreed this weekend have been raised. For example, President Donald Trump's claim that China will remove tariffs on U.S. autos doesn't appear to feature in the declaration that was agreed by both sides over the weekend.

Meanwhile, sterling took off Tuesday after the advocate-general of the European Court of Justice said the U.K. could overturn its Brexit decision (http://www.marketwatch.com/story/european-court-official-says-uk-can-unilaterally-overturn-brexit-2018-12-04) without asking for permission from other E.U. member states. A debate over Prime Minister Theresa May's Brexit deal begins Tuesday, with a vote expected Dec. 11.

(https://www.cnbc.com/2018/12/03/brexit-eu-top-court-is-set-to-rule-on-article-50.html)A stronger pound can weigh on the FTSE 100, because the index's multinational companies generate most of their sales in other currencies.

The governor of the Bank of England, Mark Carney, said food prices could rise 10% in the U.K (https://www.bbc.co.uk/news/business-46439969). due to Brexit, as he faced further questioning by the U.K. parliament's Treasury Select Committee over the results of the central bank's Brexit stress test results.

What other stocks are active?

Telecommunications stock took a hit, with Vodafone Group PLC (VOD.LN) falling by 1.8%.

Mining stocks were down, with Glencore PLC (GLEN.LN) falling by 1.7% and Rio Tinto PLC (RIO.LN) (RIO.LN) down by 1.1%. Banking stocks were also down, with HSBC Holdings PLC (HSBA.LN) falling by 1%.

British American Tobacco Group PLC (BATS.LN) (BATS.LN) slid 1.7%.

Oil stocks were in the green, BP PLC (BP.LN) rose by 2% and Royal Dutch Shell PLC (RDSA.LN) was up by 0.2%.

 

(END) Dow Jones Newswires

December 04, 2018 08:27 ET (13:27 GMT)

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