LONDON: UK shares fell on Friday as US-Iran tensions and political uncertainty dampened risk appetite, sealing a weekly decline for both blue-chip and mid-cap indexes.
The FTSE 100 ended down 0.4 percent, at 10,363 points, losing 1 percent on the week, the steepest weekly loss since early May. The FTSE 250 midcap index fell 0.6 percent, down 0.5 percent for the week.
Miners weighed on the index, with Anglo American and Rio Tinto dropped 2.6 percent, each and Glencore declined 1.6 percent. Precious metals miner Fresnillo shed about 4.6 percent.
Global shares fell, while oil prices got a boost after Washington and Tehran called off peace talks, which traders had hoped would ease supply risks around the Strait of Hormuz.
Meanwhile, Labour mayor Andy Burnham cleared a path on Friday to ousting British Prime Minister Keir Starmer, potentially ushering in a new bout of political instability.
“The strength of his (Burnham’s) mandate may determine how far he might go with anything one might call a market-unfriendly approach – i.e., higher borrowing, redistributive wealth taxes, etc,” said Saxo UK Investor Strategist Neil Wilson.
British government bond yields rose to a one-week high increasing slightly more than those for German debt, after higher-than-expected borrowing numbers and Burnham’s election victory.
Energy stocks were the main source of support. BP rose 2.8 percent and Shell gained 1.1 percent, as crude prices ticked higher.
The Bank of England held rates at 3.75 percent on Thursday but the vote split to 7-2 from 8-1 in April, with two members now backing a hike. The hawkish tilt pushed gilt yields to a one-week high.
British insurer Admiral Group slipped 3.2 percent after RBC downgraded the stock to “sector perform” ahead of results.
Barratt Redrow named former British Airways finance chief Rebecca Napier as its new chief financial officer. The homebuilder’s shares dropped 1 percent.
Reuters reported the Ladbrokes-owner Entain has begun exploring options for its joint venture in Central and Eastern Europe, including a possible sale. Stock fell 1.2 percent.