London stocks slide as BoE sees slower rebound, Glencore tumbles

Despite a stimulus-led rally since April, the FTSE 100 is still down about 20% this year while the S&P 500 is up 3%, and surging COVID-19 cases have raised the spectre of further lockdowns and threatened a nascent business recovery. The Bank of England said on Thursday the British economy would not recover to its pre-pandemic size until the end of next year, later than its earlier estimate of a recovery by the second half of 2021.

London-listed shares fell on Thursday as the Bank of England forecast a slower-than-expected rebound from the COVID-19 pandemic, while Glencore tumbled after scrapping its dividend to pay down debt. The mining group slipped 4% as it also booked a $3.2 billion impairment charge, driving the FTSE 100 down 1.2% after three straight sessions of gains.

ITV, Britain's biggest free-to-air commercial broadcaster, was also among the biggest decliners on the blue-chip index after it posted a 50% drop in first-half adjusted earnings. The mid-cap FTSE 250 was down 0.8%, with industrial, real estate and financial stocks among the biggest drags.

"The outlook for the UK economy is not great but having underperformed both Europe and U.S. markets for a very long time, UK equities are poised for some catch-up in the coming months," said Simona Gambarini, markets economist at Capital Economics in London. Despite a stimulus-led rally since April, the FTSE 100 is still down about 20% this year while the S&P 500 is up 3%, and surging COVID-19 cases have raised the spectre of further lockdowns and threatened a nascent business recovery.

The Bank of England said on Thursday the British economy would not recover to its pre-pandemic size until the end of next year, later than its earlier estimate of a recovery by the second half of 2021. British Housing Secretary Robert Jenrick said new housing starts could be down as much as 40% this year even with the industry showing signs of a rebound from its pandemic lows.

In earnings-driven moves, outsourcer Serco slumped 12.5% even as it reported a jump in first-half profit, while insurer Phoenix Group Holdings Plc jumped 2.7% on raising its 2020 cash generation target. Aero, mining and personal goods stocks were among the biggest decliners on the day.