FTSE 100 snaps four-day rally after weak GDP data fuels recession fears

London's FTSE 100 slipped on Wednesday, snapping a four-day winning run, after data showed July economic output contracted at the fastest pace this year, sparking recessionary concerns, while shares of BP fell after its CEO resigned. The exporter-heavy FTSE 100 index was down 0.1% in choppy trading by 0830 GMT, while the sterling eased 0.2% against the U.S. dollar.

London's FTSE 100 slipped on Wednesday, snapping a four-day winning run, after data showed July economic output contracted at the fastest pace this year, sparking recessionary concerns, while shares of BP fell after its CEO resigned.

The exporter-heavy FTSE 100 index was down 0.1% in choppy trading by 0830 GMT, while the sterling eased 0.2% against the U.S. dollar. Mid-cap stocks declined 0.1%.

British economic output contracted by a larger-than-expected 0.5% in July from June, data showed, worse than what economists had forecast in a Reuters poll that pointed to a 0.2% contraction in gross domestic product (GDP). "Softer growth numbers from the UK this morning which will stoke concerns that the long-feared recession that has been stalking the UK economy is at risk of finally being realised," said Stuart Cole, chief macro economist at Equiti Capital.

The data underlined signs that the economy is weakening, perhaps by more than the Bank of England (BoE) had expected ahead of its policy meeting on September 22, where the central bank is expected to raise interest rates by 25 basis points (bps) to 5.5%. "On balance, you take yesterday's (labour report) and today's numbers together and I think the case is still there for the BoE to hike by 25 bps," Cole said.

Meanwhile, Goldman Sachs and J.P. Morgan on Wednesday cut their forecasts for UK's full-year 2023 GDP after the July GDP data. Shares of BP fell 0.5% after the oil company said CEO Bernard Looney resigned on Tuesday, with immediate effect, for failing to fully disclose details of past personal relationships with colleagues. Aviva is quitting its Singlife joint venture, selling its 25.9% stake in Singapore Life Holdings and two debt instruments to Sumitomo Life for a combined 800 million pounds ($997 million), sending shares up 2.2%.

Homebuilders rose about 2%, boosted by a more than 3% gain in Redrow after it reported results.