UPDATE 2-FTSE 100 falls behind Europe as earnings disappoint

* FTSE 100 down 0.4%, FTSE 250 up slightly
* U.S.-China trade deal signed but doubts linger
* Pearson , Whitbread drag on blue chips
* ABF outshines main index
* Wood Group surges on midcaps

(Adds company news items, updates to closing prices)
By Shashwat Awasthi and Muvija M
Jan 16 (Reuters) - Underwhelming trading updates from
Pearson and Whitbread broke a three-day winning run for London's
main index on Thursday, while investors exercised caution amid a
lack of clarity on some elements of the U.S.-China trade deal.
The FTSE 100 .FTSE drifted in and out of the red but ended
0.4% lower, underperforming the STOXX 600 .STOXX which added
0.2%. All but one sector ended the day in negative territory.
The FTSE 250 .FTMC , however, eked out a 0.04% gain, helped
by a strengthening of the pound as well as an 8% leap in Wood
Group WG.L after the oilfield services provider forecast
higher 2019 core earnings. Education company Pearson PSON.L sank 9% to the bottom of
the FTSE 100 and hit its lowest level since October 2008 after
saying earnings would be lower due to sharp declines in sales at
its U.S. higher education business.
Premier Inn-owner Whitbread WTB.L followed with a 5.1%
fall after it reported lower UK like-for-like sales and warned
that clarity on Brexit following a decisive British election
outcome had yet to deliver a bounce in business bookings.

From global headlines, markets digested news that China will
boost purchases of U.S. goods and services in exchange for the
rolling back of some tariffs under a preliminary trade accord,
and were left a bit edgy as the deal does not fully eliminate
the tariffs.
"Given that it has taken nearly two years to pick off the
low hanging fruit of a Phase 1 deal, it does stand to reason
that (any) Phase 2 is likely to take much longer," CMC Markets
analyst Michael Hewson said.
"In any case, the tail risk for markets in the short term
isn't in the form of further de-escalation, but in the form of
the deal falling down and tariffs getting increased again."
The finer print of the deal states that if the United States
is prompted to slap new tariffs which are then disputed by
China, the only recourse available would be to quit the
agreement rather than lodge an appeal or retaliate. Companies exposed to international trade relations including
oil majors and miners closed in the red on Thursday.
Associated British Foods ABF.L outperformed the FTSE 100,
rising 4.1% as solid revenue growth at its Primark fashion chain
over Christmas helped it stand by its annual earnings forecast.
A notable faller on the midcap bourse was Dechra
Pharmaceuticals DPH.L after the veterinary medicines maker
pointed to a softer first-half partly due to supply issues.
N Brown BWNG.L plunged 25.2%, its worst day in nearly two
decades, after the plus-sized fashion retailer issued a profit
warning, citing aggressive discounting by rivals.