London stocks closed lower on Thursday as surging oil prices and renewed Middle East tensions unnerved investors.
The FTSE 100 fell 77.80 points, or 0.7%, to 10,639.17. The FTSE 250 declined 299.30 points, or 1.3%, to 23,627.33, while the AIM All-Share lost 0.8% to 768.76.
European markets were also weaker, with the CAC 40 in Paris and the DAX 40 in Frankfurt both closing down 1.6%. Sterling fell to US$1.3303 from US$1.3377 at Wednesday’s London close. Against the euro, the pound slipped to EUR1.1696.
Brent crude climbed above US$100 a barrel for the first time since May after Yemen’s Iran-backed Houthi rebels struck oil tankers in the Red Sea. Brent was trading at US$100.98 a barrel on Thursday afternoon, up from US$93.74 late Wednesday.
US President Donald Trump said Iran would be held responsible for further Houthi attacks on shipping and warned of “major military punishment”.
The European Central Bank left interest rates unchanged, as expected, keeping the deposit rate at 2.25%, the main refinancing rate at 2.40% and the marginal lending rate at 2.65%. However, ECB president Christine Lagarde struck a more hawkish tone, warning that higher energy prices could reignite inflation pressures.
In New York, stocks were sharply lower, with the Dow Jones down 1.3%, the S&P 500 losing 1.6% and the Nasdaq Composite falling 2.7%. US Treasury yields moved higher, with the 10-year yield rising to 4.71% and the 30-year yield increasing to 5.18%.
Back in London, oil majors rose as crude prices climbed. BP gained 3.1% and Shell added 1.6%.
Segro led the FTSE 100 risers, up 6.5%, after saying it was prepared to recommend Prologis’s “best and final” takeover proposal. The offer values Segro at around £14.0 billion, or 1,031.70p per share, based on Prologis’ closing share price and prevailing exchange rates.
Centrica was the biggest FTSE 100 faller, sliding 10% after reporting lower first-half adjusted operating profit and revenue. The British Gas owner reported pretax profit of £672 million for the six months to 30 June, swinging from a £43 million loss a year earlier, but adjusted EBITDA fell 18% to £737 million.
On the FTSE 250, CVS Group fell 6.0% despite reporting a 5.9% rise in annual revenue, as it warned that low UK consumer confidence was affecting footfall in companion animal practices. Mitchells & Butlers dropped 5.1% after reporting flat third-quarter like-for-like sales, with extreme heat weighing on food-led trading.
On AIM, Mission Group rose 24% after saying first-half performance was in line with expectations and headline pretax profit is expected to rise 27%.
Gold fell to US$4,047.56 an ounce from US$4,157.48 at Wednesday’s close.
