Banks lead London stocks lower as U.S.-China tensions rise

UK stocks slumped on Friday with Asia-focussed banks tumbling after China said it would impose a new national-security law on Hong Kong, ratcheting up tensions with Washington and raising fears of more pro-democracy protests in Asia's financial hub. The blue-chip FTSE 100 declined 1.9%, with HSBC sliding 5.2% to its lowest since March 2009 and Standard Chartered falling 4.2% to a 2016 low.

The banking index fell 3.9% and was set for its worst day this month, while the FTSE 250 lost 1.8% with declines across energy, mining, and real estate sectors. "Although investors have been willing to look past gloomy economic data so far, that might be shattered if the barbs traded between the world's two largest economies translate into actual policy action," said Han Tan, market analyst at FXTM.

The FTSE 100 has erased nearly all its monthly gains as the trade friction compounds fears of slower recovery from a deep coronavirus-fuelled economic slump even as the UK starts pulling out of a nationwide shutdown. Data on Friday showed retail sales fell by the most on record in April, while British consumer confidence in early May sunk to its joint-lowest level since the global financial crisis.

Transport operator Go-Ahead Group slumped 10% after warning the pandemic would hit its profit this year, while food and events guide specialist Time Out Group Plc fell 2.4% on launching a share issue worth 45 million pounds to pay off outstanding debt. Luxury retailer Burberry Group Plc rose 2.1% despite reporting a 27% slump in comparable sales in the final quarter of its year, which ended with about 60% of its stores closed.

British Airways owner IAG and EasyJet Plc shed about 3% each as the country geared up to announce details of its plans for quarantine for international arrivals.