FTSE 100 hits 1-week low amid broader gloom, GSK surges

GSK Plc jumped 7.5% after the drugmaker was spared thousands of U.S. lawsuits claiming that the heartburn drug Zantac caused cancer. The pharmaceutical sector rose 2.7%, posting its biggest one-day percentage gain in almost five months.

Britain's FTSE 100 slipped to one-week lows on Wednesday, dragged down by cyclical sectors amid growing worries about a recession, while GSK marked its best day since 2008 after the dismissal of U.S. lawsuits relating to heartburn drug Zantac.

The blue-chip index closed down 0.4%, its weakest level since Nov. 29. Oil & gas, industrial miners, chemical and banks - among sectors considered as more economically sensitive - led the declines.

Wall Street's main indexes also came under pressure following warnings of a looming recession from major U.S. bankers this week and upbeat economic data that fed into fears of aggressive policy tightening by the Federal Reserve. "Globally, what markets are seeing is this tug of war between macro data coming in a little bit better than expected in the US, and the underlying assumption that perhaps inflation has peaked," said Richard Flax, chief investment officer at Moneyfarm.

"It is expected that central bank policy won't need to be revised upwards from where it is." The Bank of England looks set to raise interest rates to 3.5% or more next week, but policymakers appear increasingly split on how much tightening is needed to tame double-digit inflation as the economy heads into recession.

Financial markets currently price in a 78% chance that the BoE will raise rates by half a percentage point to 3.5% on Dec. 15, and a 22% chance of a rise to 3.75%. GSK Plc jumped 7.5% after the drugmaker was spared thousands of U.S. lawsuits claiming that the heartburn drug Zantac caused cancer.

The pharmaceutical sector rose 2.7%, posting its biggest one-day percentage gain in almost five months. "Shareholders in pharmaceutical giant GSK got some timely pain relief. This outcome is probably the best GSK could have hoped for given how comprehensively the judge in the case dismissed the plaintiffs' arguments," said AJ Bell investment director Russ Mould.

Mitchells & Butlers Plc gained 6.5% after the pub and restaurant group posted a 53% jump in annual profit as it said recent sales in the new fiscal year were encouraging. However, the FTSE 250 midcap index dropped 0.9%.

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