(Sharecast News) - London stocks were a sea of red by midday on Thursday as a jump in oil and gas prices fuelled concerns that rising inflation will weigh on global growth, as the Bank of England stood pat on interest rates.
The FTSE 100 was 2.2% lower at 10,077.89.
The BoE left interest rates on hold on at 3.75% as soaring energy prices continued to climb in response to war in the Middle East. The rate-setting Monetary Policy Committee voted unanimously to leave the cost of borrowing unchanged.
Susannah Streeter, chief investment strategist at Wealth Club, said: "Bank of England decision-makers have understandably turned super-wary as war rages in the Middle East, with an energy crisis mounting and inflationary pressures building sharply. Shockflation fears are rising as oil and gas prices escalate to scorching levels, which risk spilling over into broad price rises across the economy.
"They are now forecasting that the headline rate of inflation will rise to 3.5% in March, almost half a percentage point higher than expected in the February Report. So, they feel they have little choice but to sit on their hands, watching and waiting to see how the conflict evolves."
Meanwhile, Brent crude was up 6% at $113.75 a barrel and West Texas Intermediate was 1.2% higher at $97.48 after Iran attacked the world's largest liquefied natural gas (LNG) export plant in Qatar at the Ras Laffan Industrial City. Iran had warned it would target energy assets across the Gulf following Israel's attack on the South Pars gas field.
US President Donald Trum threatened on Truth Social to "massively blow up" Iran's gas fields if Tehran continues to target energy assets in Qatar.
Trump said Israel had attacked South Pars "out of anger for what has taken place in the Middle East". He insisted the US "knew nothing" about it, and that Qatar was not involved either.
Susannah Streeter said: "Fears of a sustained energy shock have resurfaced after the escalation in the Iran war sent oil and gas prices soaring. The prospect of a longer, more drawn-out conflict is in sharp focus, as both sides ratchet up attacks on energy infrastructure. Downbeat sentiment is spreading fast.
"Warnings that oil could reach $150 a barrel have resurfaced. Israel's attack on Iran's gas fields has prompted retaliatory strikes on facilities in Qatar. Europe in particular is reliant on LNG exports from Qatar, as countries have been weaning themselves off dependence on Russia. The conflict is not only highly damaging for economies in the region, with tourism and business activity hit, but the knock-on effects of higher energy prices will have toxic repercussions worldwide."
The ECB rate announcement is due later in the day amid expectations it will stand pat at 2%.
Investors were also mulling the latest data from the Office for National Statistics, which showed the unemployment rate was largely unchanged in January. The rate rose by 0.1 percentage point in November to January, to 5.2%.
In equity markets, precious metals miner Fresnillo and gold miners Endeavour, Hochschild and Pan African all slid as gold and silver prices fell.
Miners Antofagasta, Anglo American, Glencore and Rio Tinto also lost ground as metals prices retreated.
Unilever was weaker following a report it recently held talks with Kraft Heinz about a potential megamerger of their food brands that would have brought Heinz ketchup and Hellmann's mayonnaise together under the same roof. According to the Financial Times, the discussions in recent months, which have now ended, were over a merger of Unilever's food business and Kraft Heinz's condiments division.
NatWest, Standard Chartered, M&G, Hikma, Pearson, Melrose and Beazley all fell sharply as they traded without entitlement to the dividend.
On the upside, BP gained after saying it had sold its Gelsenkirchen refinery and related businesses to independent European refiner Klesch Group for an undisclosed sum, saving around $1bn in operating expenditure.
IG Group surged as it hailed record results and announced a strategic review that could include acquisitions, changes to domicile and listing venues and potential combinations of parts of the business with other industry players. It also announced a new 125m share buyback.
Market Movers
FTSE 100 (UKX) 10,077.89 -2.21%
FTSE 250 (MCX) 21,656.29 -1.92%
techMARK (TASX) 5,730.86 -1.69%
FTSE 100 - Risers
BP (BP.) 570.40p 2.77%
Centrica (CNA) 212.10p 0.52%
BT Group (BT.A) 218.60p 0.14%
London Stock Exchange Group (LSEG) 8,638.00p 0.12%
Imperial Brands (IMB) 3,127.00p 0.10%
Games Workshop Group (GAW) 17,250.00p 0.06%
RELX FINANCE BV 3.375% GTD NTS 20/03/33 (BW73) 98.64p 0.00%
The Sage Group (SGE) 836.20p -0.05%
Schroders (SDR) 572.00p -0.09%
British American Tobacco (BATS) 4,373.00p -0.18%
FTSE 100 - Fallers
Fresnillo (FRES) 3,046.00p -8.61%
NATWEST GROUP (NWG) 535.20p -8.03%
M&G (MNG) 279.50p -7.48%
Anglo American (AAL) 2,883.00p -7.33%
Antofagasta (ANTO) 3,228.00p -7.24%
Standard Chartered (STAN) 1,519.50p -7.15%
Rolls-Royce Holdings (RR.) 1,187.50p -5.89%
Rio Tinto (RIO) 6,318.00p -5.42%
Melrose Industries (MRO) 490.30p -5.38%
Weir Group (WEIR) 2,768.00p -5.34%
FTSE 250 - Risers
Ithaca Energy (ITH) 281.25p 11.05%
IG Group Holdings (IGG) 1,437.00p 5.66%
Diversified Energy Company (DI) (DEC) 1,160.00p 5.07%
Harbour Energy (HBR) 306.60p 4.94%
Greencoat UK Wind (UKW) 100.40p 3.51%
CMC Markets (CMCX) 344.00p 2.85%
Trustpilot Group (TRST) 242.40p 2.11%
The Renewables Infrastructure Group Limited (TRIG) 68.70p 1.48%
Telecom Plus (TEP) 1,324.00p 1.22%
AO World (AO.) 88.10p 0.92%
FTSE 250 - Fallers
Pan African Resources (PAF) 127.80p -9.75%
Hochschild Mining (HOC) 548.00p -7.85%
Endeavour Mining (EDV) 4,082.00p -7.44%
Ceres Power Holdings (CWR) 304.40p -6.69%
Lancashire Holdings Limited (LRE) 574.00p -6.51%
BlackRock World Mining Trust (BRWM) 830.00p -6.22%
Abrdn (ABDN) 195.10p -6.09%
Lion Finance Group (BGEO) 9,330.00p -5.47%
Shawbrook Group (SHAW) 359.50p -5.21%
Patria Private Equity Trust (PPET) 551.00p -4.84%
241.79 (2.35%)
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