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UPDATE 2-Britain's FTSE 100 bleeds as global growth worries resurface

Updated: 28-01-2019 23:00 IST
UPDATE 2-Britain's FTSE 100 bleeds as global growth worries resurface

London's main bourse ended Monday's session at its lowest in nearly a month as yet more downbeat data from China and U.S. bellwether Caterpillar's weak forecast unnerved investors, while Ocado outshone after a report of a deal with Marks & Spencer.

The FTSE 100 index slid 0.9 percent to a low not seen since Jan. 4, while the more domestically focussed FTSE 250 shed 0.6 percent. BP and Shell tumbled 2.4 percent and 1.7 percent respectively as oil prices slumped on evidence of more growth in U.S. crude supply.

Overnight, Asian shares had rallied after Washington temporarily ended the longest U.S. government shutdown in history. But data from China showed earnings at its industrial companies shrank again in December. That rekindled tensions among investors already rattled by repeated signs of a slowdown in China amid its ongoing trade dispute with the United States.

In response, British stocks with more exposure to Asia fell - HSBC dipped 1.1 percent and luxury goods maker Burberry lost 1.5 percent. Dampening the mood further were bleak earnings reports from Wall Street and comments from European Central Bank President Mario Draghi that the euro zone economy has performed worse than expected in recent months.

"Fears about a 2019 recession appear overblown. We see global growth slowing, not enough to end the expansion but enough to keep major central banks on hold," wrote BlackRock analysts ahead of the U.S. Federal Reserve's first policy meeting in 2019 scheduled this week. U.S. stocks dived as weak forecasts from Caterpillar , the world's largest heavy equipment maker, and chipmaker Nvidia accelerated worries about a slowdown in China taking a bigger bite off corporate profits.

All the sectors in the FTSE 100 ended negative. Investors were also bracing for votes in parliament on Tuesday aimed at breaking a Brexit deadlock.

With just two months before Britain is due to leave the European Union, there are still no signs of an agreement on terms that would get through parliament. Tesco hit session lows after Britain's biggest retailer said it could axe 9,000 jobs in its UK stores and head office to simplify operations and achieve targeted cost savings. The stock closed 1.7 percent lower on the day.

Among a handful of gainers was Ocado, which rallied as much as 7 percent during the day but ended with a 2.1 percent gain after the Guardian reported the online grocer has held talks with Marks & Spencer on a food-delivery service. M&S also handed back earlier gains to rise just 0.1 percent.

Mining companies inched up 0.2 percent after hitting their highest since November as Chinese iron ore prices jumped after a deadly incident at top producer Vale over the weekend. Flybe jumped 15.2 percent after confirming its largest shareholder had urged the airline to remove its chairman and investigate its cut-price sale to a consortium.

In news driven moves, Petra Diamonds tanked over 20 percent as lower diamond prices at its flagship Cullinan mine overshadowed an increase in revenue, while recruiter SThree eked out a 1.1 percent gain after reporting a jump in earnings. (Reporting by Muvija M and Shashwat Awasthi in Bengaluru; editing by Josephine Mason, Larry King and Andrew Cawthorne)