By Devik Jain and Amal S
-London’s FTSE 100 ended lower on Friday, weighed by a slump in mining stocks, while British retail sales fell unexpectedly in August, adding to concerns about economic recovery.
After rising as much as 0.9%, the blue-chip FTSE 100 index ended 1.2% lower, and marked its third consecutive week in red. The domestically focused mid-cap FTSE 250 index eased 0.2%.
Leading declines were base metal miners including Anglo American, Rio Tinto, BHP Group and Glencore down between 2.6% and 8.2%, tracking weakness in iron ore. [METL/]
“I think the market is starting to get to grips with what potential contagion there is involved with how something like Evergrande going down would ripple around the world in terms of demand for things like iron ore,” said Keith Temperton, sales trader at Forte Securities.
British retail sales dropped 0.9% on the month in August versus a Reuters poll for a rise of 0.5%, after data earlier this week pointed towards a sharp recovery in the jobs market and a spike in inflation.
Investor focus will now be on the outcome of Bank of England’s (BoE) policy meeting next week.
“Next week’s policy decision should reaffirm that some tightening will be needed over the next few years to keep inflation (and the economy) in check. But we don’t expect the BoE to conclude that there is a sufficient case yet for near-term rate hikes,” Deutsche Bank economist Sanjay Raja said.
The FTSE 100 and the FTSE 250 indexes have declined about 1.2% and 0.6% this week, as a better-than-expected labour market recovery and rising price pressures have fuelled concerns of an early tapering of stimulus measures by the Bank of England.
Airlines Wizz Air, Easyjet and British Airways owner IAG, and holiday company TUI AG rose between 2.2% and 5.7%, as Britain was set to consider easing its COVID-19 rules for international travel.
Wickes Group jumped 3.3% to the top of FTSE 250 index after Deutsche upgraded the DIY retailer to “buy” from “hold”.