The FTSE 100 started the session firmly in negative territory, taking its cue from Asia overnight, which was driven sharply lower amid fears the coronavirus could turn into a pandemic.
A potential trade war between the US and UK also helped dampen the spirits in the City of London, where the grey weather conditions mirrored the mood.
The day’s big riser was online fashion group ASOS (LON:ASC), whose trading statement surprised on the upside for once.
“After a woeful 2019 which included profit warnings and warehouse outages, investors were hoping that October’s full-year numbers marked a line in the sand,” said Richard Hunter, analyst at Interactive Investor.
“Based on this update, the early indications are that this might be the case.”
The miners were on offer with Chile-focused copper digger Antofagasta (LON:ANTO) leading the declines with a 2.5% fall.
The market went defensive as traders bid up British American Tobacco (LON:BATS), which advanced 1.5%.
Among the tiddlers, life sciences group Avacta (LON:AVCT) was also well bid. It advanced 6% in the wake of a better than expected update on trading.
6.44am: FTSE 100 called lower
The FTSE 100 is set to start Thursday on the back foot as Trump trade tensions switch from China to Europe.
CFD and spreadbetting firm IG Markets sees the London index down around 8 points, calling the price at 7,552 to 7,555 with just over an hour to go until the open.
On Wall Street, equity benchmarks were mixed. The Dow Jones finished 9 points or 0.03% lower at 29, 186. The S&P 500 edged 0.02% higher to 3,321 and the Nasdaq Composite moved up 0.14% to 9,383.
“President Trump claimed the EU has ‘no choice’ but to negotiate a new trade deal with the US,” said David Madden, analyst at CMC Markets.
It is no secret that Mr Trump is putting America first, so he could give Brussels the same treatment he dished out to China in a bid to rebalance the trading relationship.
Also, a trade spat with the EU could score him political points, which would come in handy seeing as he is up for re-election in November.
The analyst added: “Concerns about the coronavirus influenced markets too. Parallels have been drawn with the SCARS crisis in 2003, but Beijing’s handing of the situation seems to be more open this time, so the fear factor isn’t too bad.
“Should the situation get worse, stocks in the tourist trade could suffer.
In Asia, Japan’s Nikkei dropped 235 points or 0.98% to 23,795 while Hong Kong’s Hang Seng shed 627 points or 2.2% to 27,718 and the Shanghai Composite slumped farther, losing 3.4% to 2,956.
Around the markets
The pound: US$1,3121, down 0.16%
Gold: US$1,556 per ounce, up 1.25%
Brent crude: US$62.18 per barrel, down 3.8%
Bitcoin: US$8,517, down 2.42%
Significant events due on Thursday, January 23:
Trading announcements: ASOS PLC (LON:ASC), Anglo American plc (LON:AAL), Computacenter plc (LON:CCC), Countryside Properties PLC (LON:CSP), Gear4music Holdings PLC (LON:G4M), Hyve Group PLC (LON:HYVE), PayPoint PLC (LON:PAY), Strix Group PLC (LON:KETL)
Economic announcements: ECB policy decision, US jweekly obless claims