The FTSE 100 closed sharply on Friday as US President Donald Trump threatened China with a massive increase in tariffs amid a dispute over critical minerals.
The FTSE 100 index closed down 81.93 points, or 0.9%, to 9,427.47. It had previously traded as high as 9,519.96.
The FTSE 250 closed 250.99 points lower, or 1.1%, at 21,801.84, and the AIM All-Share fell 7.37 points, or 0.9%, to 786.33.
For the week, the FTSE 100 was down 0.7%, the FTSE 250 was down 1.8% and the AIM All-Share was down 1.3%.
In European equities on Friday, the CAC 40 in Paris closed down 1.5%, as did the DAX 40 in Frankfurt.
New York stocks fell sharply at the London close. The Dow Jones Industrial Average was down 1.2%, the S&P 500 was down 1.6% while the Nasdaq Composite was down 2.2%.
Stocks in London had struggled to gain momentum on Friday ahead of Trump's latest missive.
In an article in Truth Social, the US president said China is becoming “very hostile” and wants to impose export controls related to “any and all” rare earth-related production items.
Trump called the move “shocking” and said there is “no way” China would be allowed to hold the world “captive.”
The president said that depending on China's response, he will be forced to “financially counteract the measure.”
“One of the policies we are calculating right now is a massive increase in tariffs on Chinese products” coming into the United States, he said.
“There are many other countermeasures that are also being seriously considered,” he added.
Trump said he saw “no reason” to meet with Chinese President Xi Jinping.
The comments caused further declines in oil and bond prices, and put pressure on the dollar.
The pound was trading higher at $1.3338 at the close of the London stock market on Friday, up from $1.3305 on Thursday.
The euro stood at $1.1616 against $1.1563. Against the yen, the dollar was trading at 151.87 yen, down from 153.11 yen.
The 10-year US Treasury yield was trading at 4.07%, down from 4.15% on Thursday. The 30-year US Treasury yield was at 4.66%, down from 4.73%.
Brent oil was trading at $63.19 a barrel on Friday, well below $65.95 late Thursday.
Shell fell 2.9% while BP lost 2.8%.
But gold, which was trading below $4,000, recovered and traded at $4,014.76 an ounce on Friday, up from $4,020.10 on Thursday.
Trump's comments added to the uncertainty caused by the ongoing federal government shutdown in the United States.
Deutsche Bank's Henry Allen said the fear is that the longer it lasts, the worse the economic impact will be, noting that the chances of Polymarket's closure ending before October 15 have dropped to just 8%.
The shutdown is likely to cause a delay in U.S. inflation, retail sales and industrial production figures next week.
Figures on Friday showed U.S. consumer confidence was largely unchanged in October, according to preliminary data from the University of Michigan, showing little initial impact from the federal government shutdown.
The consumer confidence index decreased slightly to 55 points in October, from 55.1 in September. On a year-on-year basis, it fell from 70.5.
“Overall, consumers perceive very little change in the outlook for the economy from last month,” the university said.
“Pocket issues, such as high prices and weakening job prospects, remain at the forefront of consumers' minds. At this time, consumers do not expect significant improvement in these factors.
“Meanwhile, interviews reveal little evidence that the current federal government shutdown has changed consumers' opinions about the economy so far.”
Oliver Allen, senior U.S. economist at Pantheon Macroeconomics, said the lack of a “significant” drop in the survey's main index in October is “encouraging,” given that about half of the report's responses will have been taken since the government shutdown began.
On London's FTSE 100, Compass Group rose 0.9% as Bank of America resumed coverage with a “buy” rating.
The broker expects the contract food service company to benefit from tailwinds to industry growth and huge gains in market share thanks to outsourcing and competition for the first time.
Bank of America noted that Compass is gaining market share, not only from regional and self-employed players, but likely from its larger peers as well.
Sage Group strengthened 1.4% as Citi opened a “positive catalyst watch” and reiterated a “buy” rating ahead of full-year results in November.
The broker noted that the accounting software provider's share price has been hit by concerns about AI disruption.
But Citi is confident Sage has the “right levers” to sustain growth and the potential to accelerate it in a better macro setup.
“AI would remain (a) key topic of discussion, while Sage's efforts to introduce and commercialize AI use cases should be more visible in 2026,” Citi said.
On the FTSE 250, building materials company Ibstock fell 4.0% after reporting “weaker than expected demand” in the UK in recent months.
Ibstock says a more uncertain near-term backdrop for its core construction markets has caused demand to be weaker than expected, hurting Clay and Concrete's third-quarter revenue.
Both sales volumes and adjusted earnings before interest, taxes, depreciation and amortization are expected to remain stable in the second half of 2025, showing no improvement from the first half.
The biggest risers on the FTSE 100 were: Admiral, up 58p to 3,388p; Imperial Brands, up 49p to 3,143p; Unilever, up 64p to 4,485p; Sage Group, up 15.5p to 1,127.5p; and St James's Place, up 13.5p to 1,325p.
The biggest fallers on the FTSE 100 were: Entain, down 33.2p to 805p; Mondi, down 30.2p to 824.1p; Glencore, down 11.3p to 345.85p; Right move, down 21.8p to 675.8p; and Shell, down 80.5p to 2,696p.
There are no major events scheduled for Monday's global economic daily with financial markets closed in Canada and bond markets closed in the United States. Later in the week, GDP and labor market figures in the UK and inflation data in China will be released.
Next week's UK corporate calendar includes housebuilder Bellway's annual results and Premier Inn owner Whitbread's half-year results.
Contributed by Alliance News
