London Markets: London stocks drop again; FTSE on track for lowest close of 2018

London markets were once again in the red on Thursday, this time amid slumping oil prices and escalating worries over U.S.-China trade relations following the arrest of a high-profile Huawei executive.

Oil, mining and banking stocks were under pressure.

What are markets doing?

The U.K.’s FTSE 100 UKX, -2.45%  was down 2.2% at 6,770.53, after a 1.4% drop on Wednesday. It’s now on track for its third straight loss and 11th decline in 15 trading sessions.

Should the index close below 6,888.69, it would set a new closing low for the year. Through Wednesday’s close, the FTSE has plunged 10% so far this year.

The British pound GBPUSD, +0.2827%  firmed to $1.2766 from $1.2735 late Wednesday in New York.

What is driving the market?

The arrest of Meng Wanzhou, the chief financial officer of Huawei Technologies, by the Canadian authorities reignited trade worries, leading U.S. stock futures to tumble on Thursday.

Chinese authorities reacted aggressively, with the spokesperson of the Chinese Embassy in Canada demanding the release of Wanzhou.

The latest developments have further driven investor doubts over the trade cease-fire reached by the U.S. and China at the weekend and also raised concerns over cybersecurity when using Chinese hardware for IT systems.

The two-day OPEC meeting starts on Thursday, and oil prices sunk amid no signs yet of a deal to cut production. A flurry of U.S. economic data will provide more insight on the state of the economy. Investors have been spooked by an inversion in the front end of the Treasury yield curve that could signal a slowdown.

Uncertainty over whether U.K. Prime Minister Theresa May will get her proposed Brexit agreement through parliament on Dec. 11 remains a worry as well.

What stocks are active?

Heavyweight banking stocks were among the biggest losers on Thursday, with HSBC Holdings PLC HSBC, -2.12%  and Lloyds Banking Group PLC LLOY, -1.93%  both falling more than 2%.

Mining stocks skidded, with Rio Tinto PLC RIO, -4.15% RIO, -0.92% and Glencore GLEN, -4.30%  down 4%, and BHP Billiton Ltd. BHP, -4.11% BHP, -1.33%  falling nearly as much.

Oil stocks were under pressure as well, with BP PLC BP., -3.34% BP, -0.58%  down 3.1% and Royal Dutch Shell PLC RDSA, -3.07% RDS.A, -1.86%  down 2.8%.

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