Risk-off mood clouds London stocks amid risk of recession



(For a Reuters live blog on U.S., UK and European stock markets, click

or type LIVE/ in a news window)

* Oil, mining stocks slide to weigh the most on FTSE 100

* Surge in British gas prices fan worries about inflation

* FTSE 100 down 2.9%, FTSE 250 off 1.5% (Updates to close)

By Sruthi Shankar and Devik Jain

July 5 (Reuters) - Britain's FTSE 100 index tumbled on Tuesday, dragged lower by economy-sensitive energy, mining and financial shares as a surge in natural gas prices after a strike in Norway fanned worries about inflation and higher risk of a recession.

The blue-chip index .FTSE fell 2.9% to close at its lowest level since June 24.

The domestically oriented FTSE 250 index .FTMC slid 1.5%, logging its fifth straight day of falls and hitting its lowest level since November 2020.

Oil majors BP Plc BP.L and Shell SHEL.L dropped 7% and 8.5%, respectively, tracking a decline in crude prices. Banks .FTNMX301010 , life insurers .FTNMX303010 and miners .FTNMX551020 dipped between 3.6% and 6.6%.

While crude prices fell on recession angst, British gas prices TRGBNBPD1 leapt nearly 16% on concerns about pipeline supplies from Norway after offshore workers there began a strike demanding wage hikes.

Adding to the gloom, the Bank of England warned that the economic prospects for Britain and the world had darkened since the start of the year and told banks to ramp up capital buffers to ensure they could weather the storm.

"It's all about timing, how long a downturn might last and how damaged households and small businesses in particular might be if the poisonous mix of high inflation and stagnant growth lingers like a bad smell," Danni Hewson, financial analyst at AJ Bell, said.

"Businesses, trying to scramble back onto their feet now COVID restrictions are something of a distant memory, are having to think about repaying any debt right when the cost of simply doing business is sky-rocketing."

Among the few bright spots, supermarket group Sainsbury's SBRY.L rose 1.1% after reported upbeat quarterly underlying sales.

Dechra Pharmaceuticals DPH.L jumped 5.3% after RBC upgraded the veterinary drugs producer's stock to "outperform" from "sector perform".
Reporting by Sruthi Shankar and Devik Jain in Bengaluru; Editing by Arun Koyyur and Alex Richardson

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.