LONDON: 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 fell 2.9% to close at its lowest level since June 24.
The domestically oriented FTSE 250 index slid 1.5%, logging its fifth straight day of falls and hitting its lowest level since November 2020.
Oil majors BP Plc and Shell dropped 7% and 8.5%, respectively, tracking a decline in crude prices. Banks, life insurers and miners dipped between 3.6% and 6.6%.
While crude prices fell on recession angst, British gas prices 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 rose 1.1% after reported upbeat quarterly underlying sales.
Dechra Pharmaceuticals jumped 5.3% after RBC upgraded the veterinary drugs producer’s stock to “outperform” from “sector perform”.
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