LONDON: London equities fell on Friday, dragged down by heavyweight banking stocks after a think-tank recommended a new tax on lenders as a possible way for finance minister Rachel Reeves to raise revenue.
The blue-chip FTSE 100 closed 0.3 percent lower, down for a fourth consecutive day and posting its biggest weekly decline in almost five months.
The Institute for Public Policy Research said Reeves should use her autumn budget to tax banks on the billions of pounds they receive in interest from the Bank of England on reserves held at the central bank.
“The UK stock market ended the week on a sour note amid suggestions that the government could help to fill its fiscal hole with a new tax on the banking sector,” said Russ Mould, investment director at AJ Bell.
“Some of the biggest names in the FTSE 100 are lenders so if they’re out of favour...it acts as a drag on the whole UK blue-chip index.”
Banking stocks retreated 1.9 percent, the worst performing sector. NatWest and Lloyds were down 4.8 percent and 3.4 percent, respectively, while Barclays lost 2.2 percent.
Precious metal mining stocks offered some support, however, gaining almost 2 percent as they tracked higher gold prices. Hochschild Mining, Fresnillo and Endeavour Mining all added between 1.8 percent and 3 percent.
The domestically-focussed midcap index was down 0.6 percent on the day, and marked its first monthly loss in five months.
Luxury fashion group Burberry fell 2.4 percent, weighing on the midcap personal goods index. Watches of Switzerland was down 2 percent.
Financial Services company JTC was the midcap’s biggest gainer, up 17.8 percent, after British private equity firm Permira said it had approached the firm with a takeover proposal.
The FTSE 100 touched a record high last week, as global shares rallied after US Federal Reserve Chair Jerome Powell signalled a possible interest rate cut for the central bank’s September meeting. However, concerns over the Fed’s independence have pressured markets this week.
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