London stocks dip in global risk off mood; commodity-linked stocks jump

Meanwhile, separate reports showed British house prices rose last month at their fastest annual pace since December 2022, while prices in UK shops rose at the slowest pace in more than two years in March. Among individual stocks, HSBC Holdings edged 0.4% higher on the prospects of recognising an estimated gain of $4.9 billion in the first quarter of 2024, as it completed the sale of its Canadian unit to Royal Bank of Canada.

British shares ended lower on Tuesday as fears about higher-for-longer interest rates sparked a global risk off mood, although a rise in commodities-linked stocks kept losses in check for the resources-heavy index.

Leading sectoral gains, oil and gas stocks advanced 3.1%, tracking higher crude prices hit their highest level this year. Industrial metal miners followed with a 2.7% rise, as strong factory data from China helped push copper prices to highest in more than a week, while precious metal miners climbed 2.3%, as gold prices scaled another record high.

The globally focused FTSE 100 retreated 0.2% after notching up a more than one-year high earlier in the session as the second quarter kicked off with traders returning after Easter break. By comparison, the pan-European STOXX 600 dropped 0.7% after notching up an all-time high as traders pared back bets on U.S. interest rate cuts after stronger than expected economic data.

UK equities have underperformed developed economy peers, which have hit record highs this year given a stagnating economy and due to a lack of exposure to the technology sector. "Given depressed valuations, and the poor performance, the market could experience a bounce, particularly as the Bank of England interest rate cuts are in sight," said Frédérique Carrier, head of investment strategy for RBC Wealth Management in the British Isles and Asia.

"But overall, we see more attractive opportunities elsewhere, in markets which provide a better balance of growth and value stocks compared to the UK's bias to value and defensive sectors." The domestically oriented FTSE 250 dropped 0.9% even as economic data was upbeat.

A survey showed British manufacturers activity grew for the first time in 20 months in March, adding to signs that last year's shallow recession has ended. Meanwhile, separate reports showed British house prices rose last month at their fastest annual pace since December 2022, while prices in UK shops rose at the slowest pace in more than two years in March.

Among individual stocks, HSBC Holdings edged 0.4% higher on the prospects of recognising an estimated gain of $4.9 billion in the first quarter of 2024, as it completed the sale of its Canadian unit to Royal Bank of Canada. The lender is also exploring the sale of some German units, according to a Bloomberg report.

Fashion chain Superdry tumbled 55% as chief executive and top shareholder Julian Dunkerton will not be making an offer for the struggling company. ($1 = 0.7973 pounds)

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