Britain's top share index retreated on Monday pulled lower by energy shares hit by a decline in oil prices and financial shares concerned over Italian banks. The bluechip FTSE 100 index was down 0.7 percent in morning trading after recent gains. The benchmark index is still up about 8 percent so far this year even after falling around 5 percent since its October peak.
Energy shares led the broader stock market lower, with the UK oil and gas index falling 1.7 percent following weaker oil prices. "Energy stocks drag the FTSE down at the start of the week as uncertainty over an Opec agreement looms," Jawaid Afsar, senior trader at Securequity, said. "Overall, as we head into the festive season, markets should retain their poise as the Trump affect sinks in," he said, referring to a sharp rally in stocks on hopes that US President-elect Donald Trump would spend heavily on infrastructure projects.
Crude prices fell more than 1 percent, adding to Friday's steep losses, as doubts re-emerged over the ability of major producers to agree output cuts at a planned meeting on Wednesday aimed at reining in global oversupply. Shares in BP, Royal Dutch Shell and Tullow Oil 1.4 to 2.3 percent. Financial stocks also came under pressure, reflecting a sell-off in European banks. Italy's banking index fell 3 percent to an eight-week low on nervousness ahead of a referendum vote on constitutional reforms on December 4 that could topple Matteo Renzi's reformist government.
The UK banking index fell 1.4 percent, dragged down by a 1.7 to 2.8 percent fall in shares of Royal Bank of Scotland, Barclays and Lloyds Banking Group. Among mid-caps, shares in Man Group fell 4.8 percent after Exane downgraded its rating on the world's biggest listed hedge fund to "neutral", citing continued sluggish fund performance and its impact on the outlook for performance fees and fund flows.
On the positive side, gold miners gather strength from a more than 1 percent rise in gold prices, which recovered from 9-1/2 month lows as the dollar extended losses after touching a near 14-year high last week. Shares in Randgold Resources, Polymetal and Fresnillo rose between 1.6 percent and 2.2 percent.
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