UK shares slip as slowdown fears sap risk appetite

By Bansari Mayur Kamdar

(Reuters) – Britain’s commodity-heavy FTSE 100 tracked a decline in oil and mining stocks on Monday as hawkish central banks stoke recession worries, while investors await corporate results from Europe and the United States.

The benchmark FTSE 100 index fell 0.2% in morning trade.

Oil majors Shell and BP declined 1.6% and 1.9%, while miners slipped 0.3%, tracking weakness in commodity prices on fears that an expected U.S. interest rate hike this week will dampen demand. [O/R] [MET/L]

Energy has been the top performing sector so far this year, up nearly 20% year-to-date, helping UK’s FTSE 100 outperform its U.S. and European peers. Volatile oil prices, however, have weighed on the index this month with traders weighing the impact of likely interest rate hikes that could cut demand against tight supply due to the loss of Russian oil.

“The FTSE has been more resilient because of its number of big international companies, particularly the big oil and gas companies and the miners which have really made hay, but going forward you really can’t guarantee that is going to be sustained,” said AJ Bell analyst Danni Hewson.

The domestically focussed mid-cap index slid 0.3%.

Travel and leisure stocks dipped 1.2% after Ireland’s Ryanair said a return to pre-COVID levels of profitability this year was not certain even as it topped first-quarter estimates.

SThree rose 2.4% after posting a 58% surge in its half-year operating profit, supported by strong hiring demand and as people change jobs in a competitive market.

Serica Energy slipped 0.6% after it rejected a revised merger proposal from energy investment firm Kistos, which valued the British oil and gas group at nearly 1.2 billion pounds ($1.44 billion). Kistos fell 2.8%.

(Reporting by Bansari Mayur Kamdar; Editing by Vinay Dwivedi)