British stocks close more than 2% lower in volatile trade

By Shashank Nayar and Bansari Mayur Kamdar

(Reuters) – London’s FTSE 100 slumped on Thursday, as volatile crude prices sent heavyweight oil stocks sharply lower, while investors feared the impact of the fast-unfolding Ukraine crisis.

The FTSE 100 index settled 2.6% lower, as oil majors Shell and BP fell 5.7% and 4.3%, respectively, tracking a drop in crude prices on a potential Iran nuclear deal that could boost supplies. [O/R]

Russia-exposed miner Polymetal plunged 42.1%, after losing its spot on the index.

Further losses in the benchmark index were capped by gains in exchange operator London Stock Exchange Group after it posted positive earnings.

LSE Group jumped 9.6% after positive earnings updates and flagging minor potential impact on its business from financial sanctions on Russia following its invasion of Ukraine.

The FTSE 100 has erased all its gains this year to trade 2% lower, but still outperforms the wider European aggregate and the S&P 500 on support from robust commodity stock gains as oil and metal prices surge on supply concerns.

However, concerns around soaring energy costs due to the escalating Russian-Ukraine conflict, coupled with a rising interest rate regime has raised economic growth worries.

“(Russia-Ukraine conflict) has supercharged the inflationary pressures already facing the globe, while at the same time blunting central banks’ response, as they will be wary of being too aggressive on rates at a time of such uncertainty,” said Russ Mould, investment director at AJ Bell.

A bunch of shares trading ex-dividend also weighed on British indexes with blue-chips Dechra Pharmaceuticals, Hargreaves Lansdown and Barclays and mid-cap stocks, including Hays, Genus and Ashmore, all falling between 2.6% and 6.6%.

The domestically focussed mid-cap index slumped 3.4%.

Among other stocks, ITV dropped 27.5% as its digital expansion plans left investors unimpressed.

British cybersecurity company Darktrace jumped 11.2% after it raised its full-year outlook for the second time in three months, reflecting strong customer growth and retention.

(Reporting by Shashank Nayar and Bansari Mayur Kamdar in Bengaluru; Editing by Rashmi Aich and Shinjini Ganguli)