LONDON: British stock indexes closed lower on Thursday as disagreements over Brexit terms between Prime Minister Boris Johnson's government and the European Union sowed concern about a messy British departure. The mid-cap FTSE 250, considered a barometer of Brexit sentiment, fell 0.1% with furnishing retailer Dunelm dragging the most on a decline in its annual profit.

The domestically-focussed index was still reeling from losses after surging Covid-19 cases sparked new curbs on social activity in England, hitting shares of restaurant and pub firms. The blue-chip FTSE 100 index shed 0.2% as gains in consumer discretionary stocks were offset by losses in healthcare and consumer staples.

Supermarket group Morrisons fell 4.6% even as it said it expected profit growth for the full year, while table-top game maker Games Workshop Group topped the midcap index after it flagged a stronger quarterly profit.

British Airways-owner IAG closed flat as it launched a heavily discounted rights issue to raise 2.74 billion euros ($3.2 billion). Homebuilders rose 1.2% after data showed house prices hit a four-year high in August, although the survey also sent a warning signal that the recovery could run out of steam.