By Shashwat Awasthi and Muvija M
(Reuters) - The FTSE 100 edged lower on Wednesday as investors remained cautious in light of a new U.S.-EU trade tussle and a Brexit summit, while a U.S. indictment wiped out two-thirds of drugmaker Indivior's value and dragged down its former parent Reckitt Benckiser.
The exporter-heavy FTSE 100 was 0.1 percent lower, lagging its European counterparts, while the FTSE 250 was up 0.3 percent, with more than half of the gains coming from security company G4S (CO:G4S), which surged on M&A chatter.
Markets were largely subdued due to a transatlantic aircraft subsidy dispute, with the U.S. threatening to impose tariffs on $11 billion worth of European Union products.
"The market is obviously taking a cautious look at the simmering EU-U.S. trade spat and preparing for a negative outcome but hoping for a happy ending," Markets.com analyst Neil Wilson said.
But the pound firmed after data showed Britain's economy unexpectedly grew in February, helped by clients of manufacturing companies rushing to stockpile goods in the run-up to the planned Brexit date.
The pound's rise ended up hurting blue-chip exporter stocks AstraZeneca, Unilever (LON:ULVR) and GlaxoSmithKline.
Market participants opted for a wait-and-watch approach ahead of a summit in which EU leaders were likely to grant British Prime Minister Theresa May a second delay to Britain's exit from the bloc, but could demand that it go beyond her preferred date of June 30.
The most notable moves came after the U.S. Justice Department accused Indivior of illegally boosting prescriptions for the film version of its blockbuster opioid addiction treatment Suboxone.
As a result, Reckitt slumped 6.5 percent on the main index and Indivior crashed 72 percent on the mid-caps index. Its shares have already been pummelled by a protracted legal battle with India's Dr. Reddy's.
"With a fine of $3 billion being touted by regulators, it is hard to imagine how Reckitt won’t get drawn in, given that the events happened under Reckitt's watch," CMC Markets analyst Michael Hewson said.
But lifting the midcap index was G4S, which jumped 20 percent on its best day in nearly two decades after Canada's Garda World Security confirmed it was considering a cash offer for the company.
Recruitment firm PageGroup advanced 5.4 percent after posting higher first-quarter gross profit, as robust business in Britain and Germany offset slowness in Greater China and France.
Retailers Tesco (LON:TSCO), Dunelm and ASOS (LON:ASOS) were also among bright spots on the market after their respective financial reports.
Tesco, Britain's biggest retailer, added 3.6 percent after a better-than-expected rise in profit, while mid-cap Dunelm rose 3 percent as higher quarterly comparable sales helped the homewares retailer forecast a full-year profit above analysts' estimates.
AIM-listed ASOS, whose profit warning had triggered a global retail selloff in December, jumped 8 percent as investors were comforted by the fashion retailer's affirmation of annual targets despite a plunge in half-year earnings.