London stocks slide as China growth concerns dent global risk appetite
By Bansari Mayur Kamdar
(Reuters) -UK shares ended lower on Monday, as tightening lockdowns in China added to investors’ concerns about a recession amid the Bank of England’s dour economic outlook last week.
The commodity-heavy FTSE 100 index fell 2.3% to record its lowest closing since March 16, with miners and oil majors Shell, BP leading losses as commodity prices retreated on demand concerns. [MET/L][O/R]
Industrial metal miners including Rio Tinto, Glencore and Anglo American fell about 4% each.
“The biggest concern that markets have at the moment about UK is that we’re likely to see fewer rate hikes over the course of the next 12-18 months and much slower growth, but I don’t think we’re going to be unique in that,” said Michael Hewson, chief market analyst at CMC Markets, UK.
Investors were already rattled after the British central bank sent a stark warning on Thursday that Britain risks a double-whammy of a recession and inflation above 10%.
Meanwhile, Bank of England policymaker Michael Saunders, who last week backed a bigger interest rate rise than most of his colleagues, said he was worried that inflation risked exceeding the BoE’s forecasts which see it topping 10% later this year.
The FTSE 100 index has outperformed its European peers so far this year but a weakness in mining stocks in the last few weeks is starting to weigh on the commodity-heavy index.
The pound declined 0.3%, limiting some losses on the export-heavy FTSE 100, compared to the domestically focussed mid-cap index down 2.6%, posting its worst session in over two months.
Capital & Counties Properties and Shaftesbury Plc slid 6.9% and 2.9%, respectively, after the real estate firms said they were in advanced talks on a merger that would bring such London tourist destinations as Covent Garden and Soho under one umbrella.
Ideagen Plc jumped 46.1% on agreeing to a takeover by private equity firm Hg Pooled Management in an all-cash deal valuing the British software firm at 1.09 billion pounds ($1.34 billion).
Rightmove Plc fell 3.4% after the British real estate website said Peter Brooks-Johnson, its chief executive officer of five years, would leave the company next year.
(Reporting by Bansari Mayur Kamdar and Amal S in Bengaluru; editing by Uttaresh.V, Rashmi Aich, William Maclean)