U.K. Stocks Fall on Trump, Earnings Worry as Most of Europe Shut

(Bloomberg) --

U.K. stocks fell on renewed fears of a U.S.-China trade war and on concern about the pandemic's impact on earnings, while most European markets were closed for the Labour Day holiday.

The FTSE 100 Index dropped 2.3% at the close in London, following its biggest monthly gain in two years. With most European markets closed, except the U.K. and Denmark, the volume of trading on the Stoxx Europe 600 Index was 74% below the 30-day average.

U.S. President Donald Trump revived his verbal attack on China, while he is also said to be considering blocking a government retirement fund from investing in the country's equities. Investor mood was further soured by cautious comments from U.S. heavyweights Amazon.com Inc. and Apple Inc. on the impact of the coronavirus on earnings.

“Market sentiment has been dealt a blow as Donald Trump raised the likeliness of yet another significant breakdown in relations between the world's two largest economies,” said Joshua Mahony, senior market analyst at IG Group. “The last thing markets want right now is another trade war with the world seemingly lurching from crisis to crisis over recent years.”

European shares rebounded in April amid unprecedented stimulus measures, signs of lockdown easing as the rate of infection slowed in many countries and on optimism about a treatment to fight the virus. Still, stocks fell yesterday following a European Central Bank policy update that left traders underwhelmed.

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Royal Dutch Shell Plc's London-listed shares extended losses following yesterday's historic dividend cut, amid a slew of analyst downgrades. The oil giant posted its worst two-day drop since early March.

Ryanair Holdings Plc fell after it said it will cut 3,000 jobs and challenge some 30 billion euros ($33 billion) in state aid being doled out to save its European competitors. Peer EasyJet Plc also fell.