London shares inch lower as oil rally fuels inflation concerns

London Shares Slip Amid Oil Rally and Inflation Concerns in Global Markets

FTSE 100 Performance and Market Drivers

Sept 8 (Reuters) - London's benchmark FTSE 100 ended slightly lower on Tuesday, with gains in commodity-linked shares helping offset broader market weakness, as a week packed with economic data worldwide got under way.

The blue-chip FTSE 100 index closed 0.1% lower at 10,811.66 points after briefly turning positive earlier in the day, while the mid-cap FTSE 250 slipped 0.64%.

Commodity and Energy Sector Movements

Oil Market Impact

• Yemen's Tehran-backed Houthis attacked energy facilities in Saudi Arabia, in a major expansion of the ongoing conflict, sending Brent crude to near $99 a barrel earlier in the day.

London Energy and Mining Stocks

• Energy stocks in London rose, with BP and Shell up 0.68% and 0.52%, respectively. [O/R]

• Miners Antofagasta and Glencore gained 4.7% and 4.2% as copper prices hit a record high. The industrial metal miners sector rose 2.7%.[MET/L]

Sectoral Weaknesses

Pharmaceutical and Consumer Sectors

• Pharma stocks were the biggest drags, with medical products maker Smith+Nephew down 3.6% and index heavyweight AstraZeneca sliding 1.4%.

• Other consumer-focused sectors also took a hit. Dunelm tumbled 14.3% after the homeware retailer issued a profit warning for 2027, citing hot summer weather.

Macroeconomic Influences

Inflation and Interest Rate Expectations

• Rising oil prices have reinforced inflation concerns, pushing global bond yields to multi-month highs and hitting risk assets lately.

• Traders are pricing in a 60% chance of a U.S. interest rate hike next week, while they expect the Bank of England (BoE) to remain on hold, according to LSEG data.

Upcoming Economic Data

• A key U.S. inflation report and economic growth data in the UK due later this week could influence these bets.

• BoE Governor Andrew Bailey said the market curve for interest rate expectations reflected investors adding a "risk premium" because of their worry about further energy price increases.

Company-Specific Highlights

Technology and Engineering Movers

• Among other stocks, technology service provider Computacenter said its annual profit would top market expectations. The company's shares, however, closed 7.8% lower, having surged to record highs earlier in the day.

• Mechanical engineering company Goodwin slumped 23.2%. The Financial Times reported that U.S. private equity firm Cerberus is nearing a £1 billion ($1.36 billion) deal for Goodwin's defence business.

Additional Information

Currency Conversion

($1 = 0.7390 pounds)

(Reporting by Anand Gopal and Purvi Agarwal in Bengaluru; Editing by Maju Samuel)