By Sagarika Jaisinghani and Susan Mathew
(Reuters) - London's blue-chip FTSE 100 ended flat on Tuesday as mixed earnings and rising friction between the United States and China weighed, while a surge in budget airline easyJet (LON:EZJ) on adding more flights lifted the mid-caps index.
Spirits maker Diageo (LON:DGE) Plc was the biggest drag on the FTSE 100 as coronavirus lockdowns saw it take a 1.3 billion pound writedown and report a bigger-than-expected decline in underlying net sales.
Oil major BP (LON:BP) Plc , meanwhile, posted its best day in two months after unveiling earlier than expected a plan to reduce its oil and gas output by 40% and boost investments in renewable energy over the next decade.
Sino-U.S. tensions escalated following U.S. President Donald Trump's move to force a sale of Chinese-owned video app TikTok's U.S. operations. China will not accept the "theft" of its technology company and is able to respond to Washington's move, the China Daily said.[MKTS/GLOB]
The FTSE 100 has struggled to build on a stimulus-led stock market rally with the world sliding into a deep recession and surging COVID-19 cases threatening even more lockdowns.
The focus this week is on a Bank of England meeting where it is expected to hold interest rates and shed more light on the pace of an expected domestic rebound.
"As the (BoE) wants to keep its powder dry for as long as possible, we don't expect any bold statements or strong hints at additional easing," said Stefan Koopman, senior market economist at Rabobank.
But a monetary policy response could be seen by November, Koopman said, given Brexit-related risks, a possible second wave of the virus and increasing unemployment.
The mid-cap FTSE 250 rose 0.9% as easyJet Plc jumped 8.8% on plans to fly at 40% of its capacity over the rest of the summer, while a first-half profit beat saw insurer Direct Line hit five-month highs.
But a 9.4% slump for Babcock following a plunge in quarterly profit, capped gains.