(Sharecast News) - London stocks fell on Thursday amid inflation concerns, as Brent crude hit $106 a barrel and as investors mulled an expected 25 basis points rate hike from the European Central Bank ahead of Friday's key US inflation print.
The FTSE 100 closed down 0.6% at 10,608.92, while Brent crude was up 5.6% at $106.92 a barrel, and West Texas Intermediate was 5.8% higher at $101.57 as Yemen's Iran-backed Houthis reportedly seized a key Red Sea port in Yemen.
Kathleen Brooks, research director at XTB, said: "This poses a further threat to global energy supplies, and suggests that tensions in the region are spreading beyond the Strait of Hormuz, posing a new threat to global energy supplies from Saudi Arabia, in particular. Although President Trump has said that the war will end after the November Mid Term elections, there is no way that the market can believe this claim, as the situation remains perilous."
Earlier in the day, the European Central Bank raised its key interest rate to 2.5%, as expected, as a result of price pressures triggered by the Middle East conflict, predicting that inflation will remain "well above target" for an extended period.
The ECB's Governing Council voted to raise all three of its interest rates by the same amount, taking the key main refinancing operations (MRO) rate to 2.65%, and the deposit facility and marginal lending facility to 2.50% and 2.90%, respectively. The last time the MRO was this low was in March 2025.
New projections by ECB staff see headline inflation averaging 3.0% in 2026, before easing to 2.5% in 2027 and 2.1% in 2028, with the latter two years' numbers revised higher than previous estimates in June.
Over the next three years, core inflation (which excludes the more volatile energy and food items) is seen at 2.5%, 2.6% and 2.3% respectively.
In equity markets, Associated British Foods tumbled after saying it expects full-year like-for-like sales at its Primark division to fall by 2.6% amid a tough consumer environment, adding that it also planned to introduce home delivery at the clothing retailer. Primark's total sales growth was expected to come in at 2% for both the fourth quarter and full year thanks to new stores and franchises. The company, which also owns food and ingredients operations, maintained full-year guidance.
HSBC lost ground as it said chief financial officer Pam Kaur plans to step down next year and a search for her successor has begun.
Electrical products retailer Currys fell despite saying it remains comfortable with market consensus forecasts after a strong start to the new financial year. Group like-for-like revenues were up 7% year-on-year over the 17 weeks to 29 August, with the larger UK and Ireland division growing by 6% and the Nordics growing by 9%.
Animal genetics firm Genus reported a rise in full-year profit and announced a £60m share buyback, but the shares slumped as revenue missed expectations.
Nutrition and beauty brand owner THG beat its own guidance for sales and profits in the first half, with adjusted operating profits more than doubling, but shares fell sharply as the company reported a significant revenue slowdown in the third quarter.
M&G retreated as it traded without entitlement to the dividend.
On the upside, defensive tobacco stocks were on the rise, with Imperial Brands and British American Tobacco the top two performers on the FTSE 100.
Market Movers
FTSE 100 (UKX) 10,608.92 -0.57%
FTSE 250 (MCX) 23,885.94 -0.92%
techMARK (TASX) 5,929.07 -0.38%
FTSE 100 - Risers
Imperial Brands (IMB) 2,488.00p 1.84%
British American Tobacco (BATS) 4,092.00p 1.54%
Vodafone Group (VOD) 128.65p 1.46%
BP (BP.) 565.10p 1.44%
Compass Group 11 (CPG) 30.96p 1.41%
Reckitt Benckiser Group (RKT) 5,058.00p 1.40%
BAE Systems (BA.) 1,923.50p 1.32%
Whitbread (WTB) 2,348.00p 1.21%
BT Group (BT.A) 200.00p 1.09%
Abrdn (ABDN) 249.40p 1.05%
FTSE 100 - Fallers
Associated British Foods (ABF) 1,860.00p -7.92%
Antofagasta (ANTO) 3,771.00p -5.68%
Anglo American (AAL) 3,972.00p -4.86%
Glencore (GLEN) 599.70p -4.11%
M&G (MNG) 332.20p -3.71%
Weir (WEIR) 2,686.00p -3.66%
Rio Tinto (RIO) 7,365.00p -3.12%
Fresnillo (FRES) 2,959.00p -2.95%
Halma (HLMA) 3,588.00p -2.82%
Barratt Redrow (BTRW) 285.90p -2.69%
FTSE 250 - Risers
Dunelm Group (DNLM) 749.50p 2.11%
Bloomsbury Publishing (BMY) 622.00p 1.97%
Trainline (TRN) 190.00p 1.88%
Globaldata (DATA) 69.60p 1.61%
Workspace Group (WKP) 362.20p 1.40%
Seraphim Space Investment Trust (SSIT) 190.80p 1.38%
Playtech (PTEC) 402.00p 1.21%
Bytes Technology Group (BYIT) 388.00p 1.20%
Ithaca Energy (ITH) 283.80p 1.14%
Harbour Energy (HBR) 277.80p 1.09%
FTSE 250 - Fallers
THG (THG) 27.66p -12.74%
Energean (ENOG) 796.00p -6.85%
Dr. Martens (DOCS) 65.20p -6.19%
Pan African Resources (PAF) 126.20p -6.10%
Avon Technologies (AVON) 1,718.00p -5.08%
Ceres Power Holdings (CWR) 405.40p -5.06%
Rosebank Industries NPV (ROSE) 329.00p -4.64%
Hochschild Mining (HOC) 613.00p -4.29%
B&M European Value Retail (BME) 223.40p -3.71%
W.A.G Payment Solutions (EWG) 94.10p -3.68%
61.14 (0.57%)
0.00