* FTSE 100 up 0.4%, FTSE 250 down 0.7%
* Housebuilders, airlines hit by Brexit upheaval
* BP gains after divestment plans
* Thomas Cook plunges among smallcaps
(Updates with closing prices)
By Muvija M and Josephine Mason
Aug 28 (Reuters) - Britain's Brexit-sensitive domestic
stocks fell on Wednesday as renewed worries about the country
leaving the European Union without a deal pressured sterling and
sapped investor appetite for stocks sensitive to slowing
consumer spending.
Fresh selling kicked in after Prime Minister Boris Johnson
moved to limit parliament's opportunity to derail his Brexit
plans by cutting the amount of time it sits between now and EU
exit day on Oct. 31. The mid-cap FTSE 250 index .FTMC skidded 0.7%, as worries
that a disorderly no-deal Brexit would hurt the economy rose.
Half of mid-caps' income is generated in the UK.
The index had gained in the previous session as sterling
rose after a pledge by opposition parties to try to avert a
no-deal Brexit.
But the new bout of political upheaval slammed sterling on
Wednesday and boosted exporter-heavy FTSE 100 .FTSE which was
up 0.4% and far outperforming the broader European bourse. The
majority of FTSE constituents make their revenue abroad.
The blue chips index was also propped up by gains in oil
major BP BP.L after it announced plans to sell its Alaskan
assets for $5.6 billion and supermarkets, which were lifted by a
positive broker note. But the rising possibility that Britain could quit the EU
without an agreement kept many investors on the sidelines.
"Until we get a change in the dynamic, they're going to
continue to underperform," said Rory McPherson, investment
director at Psigma Investment Management.
Housebuilders were the hardest hit. Persimmon PSN.L ,
Berkeley BKGH.L , Barratt Developments BDEV.L and Taylor
Wimpey TW.L were the biggest decliners on the FTSE 100, down
2.9% to 3.6%. The sector has been hit by worries that a hard
Brexit will damage the British economy.
Airlines, which are sensitive to consumer spending, were
also under pressure. British Airways owner IAG was down 1.4% and
easyJet was down 2.7%.
Prudential , which has a big Asian exposure, PRU.L fell
1.6% to its lowest since November 2016 amid continued worries
about damage to its business in Hong Kong due to the protests in
the former British territory.
The stock has fallen almost 30% since early July as the
demonstrations have escalated.
WORST MONTH IN YEARS
The FTSE 100 is on course for its steepest monthly fall in
four years, hammered by sharp escalations in the Sino-U.S. trade
war that saw China letting its currency fall below the key
7-per-dollar level for the first time in more than a decade.
"Optimism of a resolution has drifted off into the distance
as investors attempt to second-guess the next moves in the trade
dispute," London Capital Group analyst Jasper Lawler said.
Back on Wall Street, the yield on the 10-year Treasury bond
US10YT=RR fell below that on the two-year US2YT=RR , a sign
that markets foresee a recession.
Among mid-caps, Petrofac PFC.L closed up 1.1%. It had
earlier fallen as much as 7.9% after the oilfield services
provider's core profit and new orders dropped due to an ongoing
probe into its contract dealings in Saudi Arabia and Iraq.
Small-cap tour operator Thomas Cook TCG.L plummeted 16.6%
after a substantial agreement on terms of a rescue package,
which the company said could lead to its shares being de-listed.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Housebuilders at a discount https://tmsnrt.rs/2zw6ZZz
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>