By Kit Rees and Julien Ponthus
LONDON (Reuters) - British shares gave up early gains and finished in negative territory on Wednesday as points gained by Prudential and mining stocks were overturned by simmering fears of a global trade war that pushed Wall Street into the red.
The blue chip FTSE 100 (FTSE) index closed down 0.09 percent at 7,132.69 points, slightly above the pan-European STOXX 600 (STOXX), down 0.15 percent while the Dow Jones Industrial Average (DJI) was losing about 1 percent at the same time.
"The positive mood in Europe has waned after U.S. markets turned lower," David Madden from CMC Markets said.
The showdown between Britain and the Kremlin about how a Soviet-era nerve toxin was used to attack a Russian ex-spy had little impact on British shares.
Insurer Prudential (L:PRU) was the top gainer, its shares rising 5.1 percent after it said it would demerge its UK and Europe retirement and asset management business from its international insurance business.
It said it planned to demerge M&G Prudential into a separate company with a premium listing on the London Stock Exchange.
"A demerger driven by geography is one which makes commercial and strategic sense," Richard Hunter, head of markets at Interactive Investor, said.
Mining stocks provided a big boost to the FTSE, thanks to some solid industrial production data from China, which pushed metals prices higher given that China is the biggest consumer of metals in the world. [MET/L]
Shares in Glencore (L:GLEN) were up 1.8 percent, Anglo American (L:AAL) added 3.3 percent and Antofagasta (L:ANTO) rose 3.4 percent.
Results were also in focus. Despite an early rise, shares in Morrison's (L:MRW) gave up gains and posted the worst performance of the index, down 4.8 percent after the supermarket gave a full-year update amid a tough environment for food retailers due to competition in pricing and online.
While Morrison's beat forecasts and announced a special dividend, analysts voiced concerns over the sustainability of the grocer's growth, while others were disappointed that the dividend was a one-off.
"The market has not been buying into the group's recent run of form," Neil Wilson, senior market analyst at ETX Capital, said.
"There is a sense that this kind of growth will be difficult to maintain, but this has been the argument for some time and has continually been wrong," Wilson added.
Outside of the blue chips, shares in funeral services provider Dignity (L:DTY) surged more than 15 percent, putting the stock on track for its biggest one-day gain since listing in 2004 after reporting full-year results.
Dignity's shares are still down more than 45 percent this year on the back of concerns around a price war.