UPDATE 1-Britain's FTSE 100 inches down as trade tension hits Rolls Royce

London's main share index lost ground on Tuesday after the United States proposed imposing retaliatory tariffs on a variety of European Union goods, while investors waited for word on whether Britain's exit from the EU would be postponed. The FTSE 100 and the FTSE 250 were both down 0.1 percent by 0819 GMT.

Rolls Royce lost 1.1 percent after U.S. Trade Representative Robert Lighthizer proposed imposing tariffs on a list of EU products ranging from commercial aircraft and parts to dairy products and wine. The tariffs would retaliate for over $11 billion worth of damage the United States claims has been done by EU subsidies to Airbus. The World Trade Organization found those subsidies have "adverse effects" on U.S. businesses .

"Whilst at present it looks like a relatively contained problem relating to the ruling on Airbus subsidies, there is a risk of contagion if the EU decides to respond in kind," Markets.com analyst Neil Wilson said. Sterling rose on hopes that Britain would avoid a disorderly exit from the EU, as Prime Minister Theresa May meets German Chancellor Angela Merkel and French President Emmanuel Macron to ask for a delay in its departure.

Financials, often seen as among the most exposed to a no-deal Brexit, gained the most on the main index by 0813 GMT. The world's biggest advertising group, WPP, added 1.4 percent after the Telegraph reported https://www.telegraph.co.uk/business/2019/04/08/swedens-wallenberg-family-eyes-35bn-bid-kantar that buyout firm EQT was considering a bid for WPP's data analytics unit, Kantar.

Reuters reported last month that a number of buyout funds including Advent and Blackstone were in talks with WPP on bids for a majority stake in Kantar. Companies that have a greater international presence and get much of their revenue in U.S. dollars suffered as the pound rose. AstraZeneca, GlaxoSmithKline and British American Tobacco all fell.

Water utility Severn Trent declined the most on the FTSE 100 with a 2 percent drop. Its smaller peer Pennon also slipped 2 percent. JP Morgan downgraded both the stocks, saying the threat of nationalization of UK utilities was edging higher because the Brexit impasse might lead to a general election. The opposition Labour Party has proposed nationalising various businesses, utilities among them.

In midcaps, bus and rail company Go-Ahead Group also slipped 2 percent after a rating cut. "There is a definite sense of caution which is keeping traders subdued as they shift their focus towards a busy second half to the week," said London Capital Group analyst Jasper Lawler.

(Reporting by Yadarisa Shabong and Muvija M in Bengaluru; editing by Larry King)

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)