(Sharecast News) - London stocks had ticked higher by midday as the UK avoided the doubling of US tariffs on steel and aluminium imports that has come into effect on Wednesday and after a survey showed the services sector returned to growth in May.
The FTSE 100 was up 0.2% at 8,807.70.
US President Donald Trump said in a statement that for now, the UK will be spared the 50% tariff that comes into effect. He said he had decided to "provide different treatment" to the UK following the trade agreement struck in May.
The levy for the UK remains at 25%.
Investors were also mulling the latest developments in Sino-US relations after Trump said in a Truth Social post that China's leader Xi Jinping was "very tough, and extremely hard to make a deal with". The two sides are due to hold talks this week.
Russ Mould, investment director at AJ Bell, said: "Markets remain in a holding pattern pending an update on trade negotiations between the Trump administration and various foreign governments.
"All eyes are on China given it is currently the biggest loser from Trump's new trade policy, and it looks like we're still some way off from a deal between the two countries. Trump made comments on social media that imply China's President Xi Jinping is a tough cookie with regards to making a deal. A potential stalemate situation means uncertainty prevails on the markets and asset prices remain volatile."
On home shores, a survey showed the dominant service sector returned to growth last month, beating expectations.
The S&P Global UK services PMI business activity index came in at 50.9 in May, ahead of consensus and the flash reading of 50.2. It was also a notable improvement on April's 27-month low of 49.0.
A reading below the neutral 50.0 benchmark suggests contraction but one above it indicates growth.
As a result, the PMI composite output index - a weighted average of the manufacturing and services indices - also moved into positive territory, rising to 50.3 from 48.5, despite ongoing weakness in manufacturing. The manufacturing PMI, which was released on Monday, remains in contraction at 46.4.
Respondents to the service sector survey reported improved confidence among clients, including fewer issues surround tariffs.
Higher costs, however, continued to weigh on demand overall, with total new work decreasing for the fourth time in five months.
Tim Moore, economics director at S&P Global Market Intelligence, said: "The service sector regained its poise in May, as receding concerns about US tariffs, recovering global financial markets and greater confidence among clients all helped to support output growth.
"Output growth expectations for the year ahead also rebounded after April's tariff-related slump."
However, he also acknowledged that prevailing demand conditions "nonetheless remained challenging", with cutbacks in discretionary spending by both businesses and consumers.
In equity markets, Babcock jumped as JPMorgan placed the shares on 'positive catalyst watch' ahead of results on 25 June as it said the defence firm could raise guidance. It said Babcock is "one of the big winners" in the UK Strategic Defence Review published on Monday.
Antofagasta was also boosted by the fact that JPMorgan placed its shares on 'positive catalyst watch' ahead of second-quarter results and reiterated its 'overweight' rating.
WH Smith gained after saying it was well positioned for the peak summer trading period as a pure play travel retailer and posting a 5% increase in total revenue for the 13 weeks to the end of May.
Discoverie, Paragon Banking and Ninety One all rose after results.
On the downside, discount retailer B&M European Value Retail slumped as it reported a slight rise in full-year earnings against a "challenging" economic backdrop. Adjusted earnings before interest, tax, depreciation and amortisation rose 0.6% to 620m, while revenue grew 3.7% to 5.57bn.
Real estate group Hammerson fell as it announced that its chief executive of five years, Rita-Rose Gagn, has decided to step down from her role in 2026.
Market Movers
FTSE 100 (UKX) 8,807.70 0.24%
FTSE 250 (MCX) 21,098.25 0.38%
techMARK (TASX) 4,894.49 0.31%
FTSE 100 - Risers
Babcock International Group (BAB) 1,057.00p 3.42%
Melrose Industries (MRO) 486.60p 2.77%
Antofagasta (ANTO) 1,840.50p 2.62%
Spirax Group (SPX) 5,805.00p 2.56%
Games Workshop Group (GAW) 15,790.00p 2.40%
Glencore (GLEN) 288.15p 1.93%
JD Sports Fashion (JD.) 82.42p 1.90%
IMI (IMI) 2,008.00p 1.88%
Diageo (DGE) 2,026.00p 1.78%
Halma (HLMA) 2,956.00p 1.72%
FTSE 100 - Fallers
Haleon (HLN) 397.90p -1.78%
Marks & Spencer Group (MKS) 368.10p -1.74%
Sainsbury (J) (SBRY) 284.00p -1.11%
Land Securities Group (LAND) 625.50p -0.95%
Aviva (AV.) 611.40p -0.78%
Auto Trader Group (AUTO) 794.20p -0.75%
Severn Trent (SVT) 2,636.00p -0.72%
Hikma Pharmaceuticals (HIK) 2,116.00p -0.66%
Lloyds Banking Group (LLOY) 76.56p -0.62%
United Utilities Group (UU.) 1,151.50p -0.52%
FTSE 250 - Risers
Discoverie Group (DSCV) 715.00p 12.95%
Ninety One (N91) 171.70p 5.86%
Chemring Group (CHG) 544.00p 4.82%
Watches of Switzerland Group (WOSG) 435.60p 4.46%
WH Smith (SMWH) 1,062.00p 3.71%
W.A.G Payment Solutions (WPS) 74.40p 3.33%
NextEnergy Solar Fund Limited Red (NESF) 68.70p 3.31%
Burberry Group (BRBY) 1,087.00p 3.13%
Wizz Air Holdings (WIZZ) 1,643.00p 2.75%
Harworth Group (HWG) 174.00p 2.65%
FTSE 250 - Fallers
B&M European Value Retail S.A. (DI) (BME) 303.50p -8.58%
THG (THG) 25.60p -8.24%
IG Group Holdings (IGG) 1,065.00p -3.18%
Indivior (INDV) 930.00p -2.46%
Ferrexpo (FXPO) 49.75p -2.45%
Mobico Group (MCG) 31.12p -2.45%
Abrdn (ABDN) 175.20p -2.40%
CMC Markets (CMCX) 281.50p -2.26%
Patria Private Equity Trust (PPET) 540.00p -1.46%
Hammerson (HMSO) 278.20p -1.42%
9.75 (0.11%)
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