London stocks fall 1% as geopolitical tensions and economic data loom

There were words of caution from U.S. Fed officials on Thursday about the need to keep interest-rate cuts in check until inflation clearly slows, with Minneapolis Fed President Neel Kashkari saying that if inflation continues to stall, no cuts may be required at all by year end. Meanwhile, British house prices fell 1% in March, their first drop since September 2023, figures from mortgage lender Halifax showed on Friday.

British equities fell on Friday amid escalating tensions in the Middle East and dampened risk appetite following hawkish remarks from Federal Reserve officials, while investors braced for the release of key U.S. and UK economic data.

By 8:10 GMT, both the internationally oriented FTSE 100 and the more domestically focused FTSE 250 lost 1% each and looked set to post weekly declines. All sub-indexes were lower across board, with personal goods leading losses with a 2% drop.

Markets globally assessed the news that Israel braced on Thursday for the possibility of a retaliatory attack after its suspected killing of Iranian generals in Damascus this week, and Prime Minister Benjamin Netanyahu said the country would harm "whoever harms us or plans to harm us". "Investors are having to seriously consider the potential that what's going on in the Middle East will get worse before it gets better and comments from the Israeli Prime Minister have stoked fears that there is going to be a much wider impact," Danni Hewson​​​​, head of financial analysis at AJ Bell, said.

Oil prices extended gains on Friday and headed for a second weekly gain, while travel and leisure stocks fell 1.6%. There were words of caution from U.S. Fed officials on Thursday about the need to keep interest-rate cuts in check until inflation clearly slows, with Minneapolis Fed President Neel Kashkari saying that if inflation continues to stall, no cuts may be required at all by year end.

Meanwhile, British house prices fell 1% in March, their first drop since September 2023, figures from mortgage lender Halifax showed on Friday. Later in the day, investors will parse UK business activity data for March and the U.S. non-farm payrolls report for fresh insights into the trajectory of interest rates.

Experian fell 1.6% after the credit data group agreed to acquire peer illion for up to A$820 million ($542.1 million). Rio Tinto slipped 1.3% after shareholders demanded the company come clean on environmental issues.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)