LONDON, May 29 — UK shares fell for the first time this week today, as fears over Washington’s response to Beijing tightening its control over Hong Kong overshadowed optimism about a pickup in business activity with the easing of coronavirus-induced lockdowns.

The blue-chip FTSE 100 was down 0.8 per cent with travel , industrial and personal goods stocks among the top decliners, while the mid-cap FTSE 250 shed 0.7 per cent to snap a nine-day winning streak.

Banks tracked a decline in gilt yields as investors fled to perceived safe havens ahead of US President Donald Trump’s news conference on China’s move to impose a national security law on Hong Kong that has raised concerns over its function as a global finance hub.

"The market thinks the security law headline is mostly behind, so it will be looking for the actual list of US reactions and whether it will make a change on Hong Kong’s special trade status,” said Stephen Innes, markets strategist at AxiCorp.

Renewed US-China tensions have threatened a wider stock market rally that was powered by historic global stimulus and hopes for a post-coronavirus return to economic normalcy.

After crashing more than 36 per cent from a January record high, the FTSE 100 has recovered about 26 per cent since mid-March and is now on track for its biggest two-month gains in a decade.

Still, the index has underperformed its European peers as, despite plans for the economy to reopen from next week, business confidence remains low and car production threatens to slump this year to its lowest in decades.

Rolls-Royce tumbled 9.2 per cent as Standard & Poor’s cut its credit rating to junk on the disruption to global air travel from the Covid-19 pandemic.

Discount retailer B&M rose 2.5 per cent after an upbeat trading update, while building materials supplier SIG Plc gained 5.9 per cent on plans to raise £150 million (RM804 million) in new equity. — Reuters