Stronger sterling and trade war angst hit FTSE, Whitbread soars

By Kit Rees

LONDON (Reuters) - Britain's top share index fell on Friday and was set to end the month with a loss 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.

The blue-chip FTSE 100 was down 0.3 percent at 7,495.63 points by 0904 GMT as cyclical sectors fell, while mid caps gained 0.2 percent.

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 two economic powers.

"The FTSE 100 looks set to end the week on a downbeat note with a threat from Donald Trump to pull the U.S. out of the World Trade Organisation helping to revive fears over global trade," AJ Bell investment director Russ Mould said.

Closer to home, Trump rejected an offer from the European Union to eliminate tariffs on cars and said the EU's trade policies are "almost as bad as China", a media report said.

Oil majors BP and Royal Dutch Shell were down 0.7 percent and 0.5 percent respectively as the price of oil fell.

Likewise, a weaker copper price was a drag on heavyweight miners. Shares in Glencore, BHP Billiton, Rio Tinto and Anglo American all fell between about 0.3 percent and 1 percent.

However, Whitbread's shares were standout gainers.

They soared 16 percent to hit their highest level since December 2015 after agreeing to sell the group's Costa coffee chain to Coca-Cola Co 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 dropped nearly 7 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 near a one-month high, boosted by hopes of a breakthrough on Brexit following comments from the European Union's chief Brexit negotiator Barnier this week.

The FTSE 100 was on track to end August with a 3.3 percent loss, as worries over a possible "no-deal" Brexit nagged.

(Reporting by Kit Rees; Editing by Louise Ireland)