British stocks dented by plunge in Thomas Cook, trade war fears

A plunge in tour operator Thomas Cook weighed on British stocks on Tuesday, as miners tumbled with metals prices dented by fears of a further escalation in U.S.-China trade tensions.

The FTSE 100 opened higher but gains quickly evaporated, leaving the index down 0.2 percent by 0950 GMT. The mid-cap FTSE 250 index was down 0.4 percent.

U.S. President Donald Trump told the Wall Street Journal he would slap further tariffs on Beijing and threatened to impose tariffs on iPhones imported from China.

"The tussle between the two countries extends well beyond trade issues and is likely to endure, in our view," Blackrock's global chief investment strategist Richard Turnill wrote in a note.

Miners, oil stocks and healthcare were the biggest drags on the FTSE 100.

The FTSE 250 fell 0.4 percent as several mid-cap stocks suffered severe falls.

Thomas Cook Group plunged as much as 31 percent after it suspended its 2018 dividend and cut its profit forecast for the second time in two months, saying an exceptionally hot summer had deterred Britons from holidaying abroad.

"Thomas Cook's third profit warning for 2018 cuts underlying EBIT by another c.10 percent versus consensus," wrote Jefferies analysts.

They added that the dividend suspension may concern investors given dividends were only 9 million pounds in 2017.

The stock was last trading down 23.5 percent at 37p, and also dragged rival TUI down 3.5 percent.

In other big results-driven moves, Greggs shares surged as much as 16 percent to a fresh record high after the bakery and food-to-go chain reported strong sales in October and November and said it expected higher 2018 profits.

Shop sales growth was ahead of expectations, Shore Capital analyst Darren Shirley, wrote, and accompanied by good cost control.

"We fully expect to upgrade our full-year 2018 forecasts ... with the pace and magnitude of our upgrades reflective of the high levels of operational gearing across the Greggs business," Shirley wrote.

Back on the FTSE 100, Coca-Cola bottling company CCH climbed 5.8 percent, the top performer, after UBS upgraded the stock to "buy" from "sell", saying its recent share price losses made it attractively valued.

NMC Health fell 4.4 percent to the bottom of the index after Jefferies analysts cut it to "underperform" from "hold", saying they do not share the market's optimism on Saudi Arabia, a key market for the firm.

UDG Healthcare shares fell 7.9 percent after the mid-cap healthcare facilities company said 2019 growth would be impacted by planned investments.

Overall analysts are increasingly pessimistic about British firms' results, and have been cutting their earnings forecasts for the FTSE 100 at the fastest pace in three years.

(Reporting by Helen Reid Editing by Andrew Heavens)

(With inputs from agencies.)