UK stocks drop as investors shun risky bets in turbulent week

The London Stock Exchange Group offices are seen in the City of London, Britain, December 29, 2017. REUTERS/Toby Melville

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  • Sterling slides again
  • Vistry edges up on forecast
  • FTSE 100 flat; FTSE 250 off 0.4%

July 8 (Reuters) – UK’s main stock indexes slipped on Friday as global sentiment soured at the end of a week marked by political turmoil in Britain, soaring energy prices in Europe and hawkish comments from major central banks.

The blue-chip FTSE 100 (.FTSE) dipped 0.01%, while the domestically oriented FTSE midcap index (.FTMC) slid 0.4%.

Risk aversion gripped global markets after the shooting of former Japanese Prime Minister Shinzo Abe, while investors awaited US jobs data that could offer clues on the Federal Reserve’s rate hike plans.

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The pound, meanwhile, weakened following brief gains made on Thursday after Boris Johnson announced his resignation as British prime minister. read more

The currency had hit a two-year low versus the dollar earlier this week amid the political chaos as well as worries about economic growth.

“We now see a partial policy vacuum at a time when the economy is stagnating and it’s unlikely the Budget will be presented until late in Q4,” Javier Corominas, director of global macro strategy at Oxford Economics said in a note.

“This will increase the focus on the Bank of England, further reducing the chances of a step up in the pace of rate hikes as it adopts a wait-and-see approach over weeks ahead.”

Meanwhile, a survey showed British employers slowed their hiring via recruitment agencies in June as vacancies increased at the weakest rate in more than a year, adding to signs that the labor market is losing some of its inflationary heat. read more

Shares of global miners such as Rio Tinto (RIO.L) and Anglo American (AAL.L) dragged down the FTSE 100 the most, as metal prices slid on worries about China’s COVID-19 flare ups.

Housebuilder Vistry Group Plc (VTYV.L) rose 2% after it forecast gross margins to rise significantly in fiscal 2022, riding on strong demand across its businesses. read more

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Reporting by Sruthi Shankar in Bengaluru; Editing by Amy Caren Daniel and Arun Koyyur

Our Standards: The Thomson Reuters Trust Principles.

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