May 21, 2020 / 8:08 AM / 16 days ago

UPDATE 2-FTSE 100 retreats as recovery hopes dim, trade worries resurface

* UK economy shrinks but pace of slide eases in May -PMI

* Rising U.S.-China trade tensions weigh on mood

* Premier Inn owner declines after saying it will seek cash

* EasyJet rises on plan to resume some flights in June

* FTSE 100 down 0.9%, FTSE 250 up 0.1% (Adds comments, updates prices to close)

By Shreyashi Sanyal and Devik Jain

May 21 (Reuters) - London’s FTSE 100 ended lower on Thursday as optimism faded about any speedy recovery from the coronavirus-induced economic slump, while U.S.-China trade tensions returned firmly to the forefront of investors’ minds.

The export-heavy FTSE 100 slipped 0.9%, taking the shine off strong gains earlier in the week. However, the mid-cap FTSE 250 narrowly extended gains to a fifth day with a 0.1% rise.

Grim economic data continued to pour in; the UK economy shrank again in May, but at a slower pace than April, a survey by IHS Markit showed.

Risk appetite was also hindered by rising tensions between Washington and Beijing over China’s handling of the coronavirus outbreak. U.S. Secretary of State Mike Pompeo on Wednesday called China’s $2 billion pledge to fight the pandemic “paltry”.

“The questioning around globalization is going to come to the fore again, simply because now we’re seeing this escalation in the trade war again,” said Stephen Innes, chief global market strategist at AxiCorp.

Banks, oil and gas and miners were the biggest decliners among sector indices.

After rallying about 23% since late March on a raft of global stimulus and, more recently, the easing of COVID-19 lockdowns, the FTSE 100 is now about 22% below its January record high.

Premier Inn owner Whitbread Plc sank 13.4% to a two-month low after it said it would seek 1.01 billion pounds ($1.2 billion) in fresh cash from shareholders to help weather the COVID-19 crisis.

Car dealer Inchcape Plc fell 7.7% as it posted a slump in April revenue and said the global economic impact of the lockdowns would be felt until 2021.

British low-cost airline easyJet climbed 4.4% as it said it would restart a small number of flights on June 15. (Reporting by Shreyashi Sanyal, Devik Jain and Sagarika Jaisinghani in Bengaluru; Editing by Shounak Dasgupta and Pravin Char)

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