The FTSE 100 started the day marginally lower, down 0.3% at 7,852.81 amid a flurry of earnings reports including Vedanta, Severn Trent, Babcock, Britvic and Dairy Crest.

The lower tone came from the Asian markets which were traded down after the US and China appeared to have restarted their tariff animosities. Late Tuesday President Donald Trump re-opened the issue saying that he was unhappy with the results of the China-US trade negotiations when China agreed to allow higher imports of US goods. Trump also said that the planned summit between him and the North Korean leader may happen later than planned causing the Shanghai Composite to trade 1.38% lower and the Nikkei to fall 1.18%.

Apart from Dairy Crest, which fell 7.21% to 498.60 despite reporting a 3% increase in full year profits, the biggest faller among FTSE 250 firms was Indian mining conglomerate Vedanta, down 4.22% to 807.70. The move is a little bit counter-intuitive given that the company which is one of the world’s largest miners of zinc, a metal which is used with steel for anti-corrosion in anything from construction to boat building, just managed to swing to a net profit of $235.6 million in the year ended March 31. This is from a net loss of $22.7 million in the financial year 2017. The production levels at Vedanta’s Indian operations of zinc and silver are already at a record high and the company has ambitious plans to increase it further to 1.2 million tonnes from the current 960,000 tonnes in the next two years.

Vedanta to pay out final dividend

It is shaping up a good day for dividend shares as Vedanta plans to pay out a final dividend of 41 cents a share, bringing the full year dividend to 65 cents.

Water utility Severn Trent, another old reliable when it comes to dividend, will pay out a final dividend of 51.92 pence a share this year, up 3 pence from a year ago. The company said it made an underlying profit before tax and interest of £541 million, falling slightly below the £543 million expected by analysts.

The euro was hit this morning by economic data showing that the Eurozone Purchasing Managers Index for the services industry fell to a 16-month low of 53.9 and the manufacturing PMI was down to a 15-month low of 55.5. The European currency traded down 0.53% at $1.1719 while the pound was down. The pound hit a five-month low against the dollar, down 0.32% at 1.3392, following comments from the Bank of England governor Mark Carney Tuesday saying that the UK economy was 2% smaller than forecast before the EU referendum and that U households were £900 worse off because of Brexit.

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Commodities and Shares Editor
23rd May 2018
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