London stocks fell in early trade on Thursday, taking their cue from heavy losses in Asia amid renewed concerns about trade relations between the US and China.

At 0830 GMT, the FTSE 100 was down 1% at 6,853.85, while the pound was off 0.1% against the dollar at 1.2727 and 0.1% firmer versus the euro at 1.1233.

Investors were feeling newly jittery about US-China relations as it emerged that the chief financial officer of Chinese telecoms company Huawei, Meng Wanzhou, was arrested in Canada over the weekend and faces extradition to the US over possible violations of sanctions against Iran. China has urged both Canada and the US to “rectify wrongdoing”.

CMC Markets analyst Michael Hewson said: "The arrest comes against a backdrop of concerns about trade and technology as well as cyber security when using Chinese hardware for IT systems. ZTE another Chinese firm has already been sanctioned by US authorities so for Huawei to be dragged in as well comes at a bad time when tensions between China and the US over trade at such a delicate stage, and could derail whatever was agreed at the weekend between President’s XI and Trump."

Across the pond, the CME had to pause the trading for the S&P 500 futures when they opened, amid an intense sell-off. Spying a "bloodbath", Think Markets analyst Naeem Aslam said: "The risk aversion trade has returned with vengeance as the MSCI Asia Pacific index is on track for its worst three-day plunge since October. The entire trade truce element between the US and China which promoted some optimism in the market is under a huge threat."

In UK corporate news, packaging company DS Smith was the worst performer on the top-flight index despite saying it grew profits 28% in the first half of the year as acquisitions and solid organic growth combined with an increased return on sales margin.

William Hill suffered the heaviest losses on the FTSE 250, meanwhile, on news that Britain's gambling companies have voluntarily agreed to stop advertising during live television sport. Ladbrokes owner GVC Holdings was also in the red.

Just Eat and Royal Mail both retreated as it emerged that they will be booted out of the FTSE 100 as of 24 December, replaced by insurer Hiscox and Spirax-Sarco Engineering following the latest quarterly review.

Specialist insurer Beazley declined as it said its early estimate of the cost of claims from the recent California wildfires is $40m (£31m), net of reinsurance. The company said investment markets continue to be volatile and its year to date investment return to 30 November 2018 was 0.5% ($27m).

Business information and events group Euromoney Institutional Investor ticked lower as it agreed to buy BoardEx and The Deal from parent company TheStreet for $87.3m in cash.

Scandal-hit Ted Baker bucked the trend after it confirmed the appointment of an independent law firm to carry out an investigation into reports of "forced hugging" by founder and chief executive Ray Kelvin, as it posted a dip in revenues in the 16 weeks to 1 December.

In a note on the housebuilding sector, Liberum upgraded Barratt Developments, Bovis Homes and Crest Nicholson to 'buy'. Elsewhere, software group Sage was downgraded to 'add' at AlphaValue.

Next, Royal Mail, Babcock, Big Yellow, Britvic, Cranswick, Greene King, HomeServe, Intermediate Capital Group, Investec, LondonMetric and Mediclinic International were among the companies whose stock went ex-dividend.

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Top 10 FTSE 100 Risers

#		Name	Change Pct	Change	Cur Price
1		British American Tobacco	+0.92%	+25.00	2,752.00
2		National Grid	+0.17%	+1.40	826.90
3		Randgold Resources	+0.13%	+8.00	6,390.00
4		Severn Trent	+0.11%	+2.00	1,854.50
5		Sky plc	+0.00%	+0.00	1,727.50
6		Old Mutual	+0.00%	+0.00	210.90
7		BHP Billiton	+0.00%	+0.00	1,573.00

Top 10 FTSE 100 Fallers

#		Name	Change Pct	Change	Cur Price
1		Mediclinic International plc	-6.47%	-22.40	324.00
2		Antofagasta Plc	-6.21%	-50.80	767.00
3		Prudential	-5.78%	-87.00	1,417.50
4		Schroders	-5.74%	-144.00	2,365.00
5		Babcock International Group	-5.31%	-29.40	524.20
6		Glencore	-5.03%	-14.35	271.15
7		Scottish Mortgage Investment Trust	-4.92%	-24.15	466.55
8		Rolls-Royce Holdings	-4.70%	-39.00	790.40
9		London Stock Exchange	-4.47%	-180.00	3,847.00
10		Berkeley Group Holdings	-4.44%	-152.00	3,271.00

Wall Street closed with heavy losses on Tuesday, after a session in which traders looked into the fine print of Monday's trade war ceasefire with China and digested a flattening yield curve in government debt.

The Dow Jones Industrial Average ended the day down 3.1% at 25,027.27, the S&P 500 was off 3.24% at 2,700.06, and the Nasdaq 100 was 3.78% softer at 6,795.21.

Following Monday's rally, market participants grew increasingly sceptical about the truce between China and the US with confusion about when it would kick-off also undermining sentiment.

Trump's economic advisor, Larry Kudlow told reporters on Monday that it would start on 1 January, but the White House later issued a statement saying that the 90-day truce began on 1 December.

There was also confusion over the details of the truce, with several senior White House figures contradicting one another.

“The weekend dinner date between Trump and Xi initially drew a positive response, with markets rallying at the prospect of the trade war being paused for a few months and possibly even stopped altogether as talks progress well,” said Oanda analyst Craig Erlam.

"This has since drawn plenty of scepticism about just how significant an agreement it was and what can possibly be achieved in the next few months that will prevent further tariffs being imposed."

Also weighing on sentiment was the flattening of the US interest rate curve, as the yield on five-year government debt fell below that on three-year debt - something that has foreshadowed previous recessions - as investors turned less confident around the outlook for economic growth.

In corporate news, watchmaker Movado jumped 12.55% after its third-quarter revenue beat expectations but profit fell short.

Industrial distributor HD Supply reversed earlier gains to finish down 0.61%, even after its third-quarter earnings and revenue topped analysts' forecasts and the company upped its full-year guidance.

Elsewhere, AutoZone shares surged 6.48% after its first-quarter same-store sales rose 2.7%, beating expectations for a 2% increase.

Dollar General was down 6.8% after its third-quarter results, as it cut its 2018 earnings per share outlook to $5.85-$6.05 from $5.95-$6.15.

Apple was down 4.4% after leading Monday's rally.

Canada has arrested Huawei’s global chief financial officer in Vancouver, where she is facing extradition to the US in a move likely to exacerbate tensions between the US and China. Meng Wanzhou, one of the vice-chairs on the Chinese technology company’s board and the daughter of the company founder Ren Zhengfei, was arrested on 1 December and a court hearing has been set for Friday, according to Canada’s department of justice. The arrest is reportedly related to violations of US sanctions. – Guardian

Facebook staff in 2012 discussed selling access to user data to major advertisers, before ultimately deciding to restrict such access two years later, according to a tranche of internal emails released by the UK parliament. The internal emails were obtained by the House of Commons digital, culture, media and sport (DCMS) committee last month after they had been disclosed, under seal, by Facebook as part of a lawsuit against it by the American software developer, Six4Three. - Guardian

KPMG has rounded off a year of "unprecedented scrutiny" following the collapse of Carillion by unveiling a surge in UK profits and partner pay. The Big Four auditor, which earlier this year was accused of being “complicit” in client Carillion's “questionable” accounting practices, posted a 53pc jump in pre-tax profits for the year to September 30. - Telegraph

Britain’s most important trading artery to the EU could be clogged up for years by restrictive planning rules under a no-deal Brexit, the Chancellor has warned. Dover would require significant new physical infrastructure if the UK left the EU without a deal and instead moved to a World Trade Organisation model of trade with the continent, Philip Hammond said. This includes new lorry parks, buildings and equipment for staff checking new paperwork. - Telegraph

Capita has invited 70,000 employees to apply to join its board as non-executive directors, becoming the first FTSE company since the 1980s to appoint workers to its board. The two successful employees, who must have worked for Capita for at least two years, will be paid an additional £64,500 on top of their existing salary. They will take on full boardroom non-executive duties as well as keeping their day job. - The Times

Remember the scare stories? Many bankers, politicians and analysts predicted that Brexit would prompt an exodus of financial services jobs and businesses, weakening the City’s dominance as a global financial centre. Yet with less than four months to go before Britain is set to leave the EU, banks and financial services companies are looking for more new office space in the City than at any time since 2015, according to JLL, the property services company. - The Times