British equities mixed as markets mull US-UK trade deal

By Sanchayaita Roy, Ragini Mathur and Twesha Dikshit

(Reuters) -British blue-chips closed lower on Thursday, while midcaps clocked gains as investors weighed up a trade deal between the United States and Britain, the latest in a saga of global trade developments.

The United States and Britain announced a "breakthrough deal" on trade, where London agreed to lower its tariffs to 1.8% from 5.1% and provide greater access to U.S. goods as part of the agreement, while a 10% baseline tariff on UK goods imported into the U.S. remains in place.

Additionally, the British government said the deal will reduce tariffs on some British-made cars from 27.5% to 10% and the 25% tariffs currently imposed on British steel exports to the U.S. will be reduced to zero.

"For the UK this deal appears to be ultimately favourable for some of its largest exports, specifically cars, auto parts and aerospace engines to name some of the key areas", said Lindsay James, investment strategist at Quilter.

The midcap FTSE 250 gained 0.6%, posting its highest close in more than two months, while the FTSE 100 fell 0.3%.

Shares of luxury car company Aston Martin climbed close to 14%, among the top gainers on the midcap index.

Rolls-Royce closed 3.7% higher after U.S. Commerce Secretary Howard Lutnick said they will allow engines and plane parts from the jet engine maker to come in the U.S. tariff-free.

The broader Aerospace and Defence subindex climbed 2.5%.

Earlier in the day, the Bank of England (BoE) cut interest rates as expected, although the uncertain impact of tariffs on economic growth brought a surprise three-way split among policymakers.

Among other stocks, IMI emerged as the top performer in the blue-chip index, gaining 5.1%, after the specialist engineering company reaffirmed the financial year 2025 outlook.

Renishaw soared 18.6% to the top of the midcap index after the engineering firm decided to shut loss-making drug delivery unit.

(Reporting by Sanchayaita Roy, Ragini Mathur and Twesha Dikshit in Bengaluru; Editing by Vijay Kishore and David Evans)