Stocks in London got off to a downbeat start on Monday with China lockdown worries weighing on the FTSE 100's heavyweight mining contingent.
Elsewhere in Europe, concerns were centred over Russia's gas supply.
Gas supplies from Russia to Germany are being halted for 10 days for scheduled maintenance work on the Nord Stream 1 Baltic Sea pipeline, the most important connection for natural gas flows to Germany.
Gas is set to stop flowing at 0400 GMT on Monday and is due to commence again early in the morning of July 21. However, officials are highly concerned that the supply might not be reinstated, as Russia's war continues against Ukraine.
‘Possible outcomes range from maintenance ending as planned, NS1 opening with further limits to flow, and additional escalation as other flows of Russian gas are cut. The worst case (total stop of gas flows) brings recession and probably another 10% fall by the euro from here. The best case, continuation of the status quo, leaves markets nervous,’ said Societe Generale's Kit Juckes.
The FTSE 100 index was down 72.04 points, or 1.0%, at 7,124.16. The FTSE 250 index was down 159.59 points, or 0.8%, at 18,753.36. The AIM All-Share index was down 3.56 points, or 0.4%, at 883.18.
The Cboe UK 100 index was down 1.1% at 710.15. The Cboe 250 was down 1.0% at 16,314.62 and the Cboe Small Companies was 0.1% lower at 13,221.75.
In mainland Europe, the CAC 40 stock index in Paris was down 1.9%, while the DAX 40 in Frankfurt was down 2.0%. The euro was priced at $1.0125, down from $1.0185 late Friday.
In London's FTSE 100, miners were among the worst performers amid China lockdown fears. Antofagasta was down 4.6%, Anglo American down 4.0% and Glencore down 2.5%.
Shanghai recorded more than 120 virus cases over the weekend, having seen its first case of the highly contagious BA.5 Omicron strain, forcing officials to launch another mass testing drive.
With China fixated on its zero-Covid strategy of wiping out the disease, there is increasing concern that authorities will revert to another painful lockdown, with Shanghai residents having only emerged from a two-month confinement in June.
There have also been new infections uncovered in other parts of the country, including Beijing.
Dechra Pharmaceuticals was down 2.0%. The veterinary products firm reported annual revenue progress, though it cautioned that growth rates are normalising as pandemic tailwinds ease.
For the year ended June 30, revenue increased by 14% at constant exchange rates and 12% at actual exchange rates. In financial 2021, revenue grew 20% at constant currency and 18% on a reported basis to £608.0 million.
Chief Executive Officer Ian Page said: ‘We are delighted that the financial year just ended was another record year for Dechra and in line with expectations, with group revenue growth slowing to more normal levels as expected in the second half as the impact of the pandemic on our markets unwinds. Whilst we expect current macroeconomic uncertainties to continue, the veterinary pharmaceutical market remains resilient and in growth.’
In the FTSE 250, Wizz Air was down 4.2% after the Hungarian airline said it expects a ‘material’ profit in the second quarter but cautioned it will trim flight utilisation over the summer to cope with recent travel chaos.
For the first quarter to June 30, Wizz Air said it registered a €285 million operating loss and net loss of €450 million, but expects a ‘material’ operational profit in the second quarter on strong summer demand.
Wizz's update came as London's Heathrow Airport warned it will ask airlines to cancel more flights this summer if it does not believe previous schedule reductions will sufficiently reduce disruption.
Rival airline operators Tui and easyJet were down 3.2% and 2.7% respectively in a negative read-across.
On Monday, the Japanese Nikkei 225 index closed up 1.1%. Japan's ruling party and partners won enough votes to form a supermajority in an upper house election held just days after the assassination of former prime minister Shinzo Abe, local media said Monday.
The yen was trading at 24-year lows against the dollar, however. Against the yen, the dollar was quoted at JP¥136.75, higher against JP¥135.88 late Friday. The greenback hit a high of JP¥137.28 overnight.
In China, the Shanghai Composite ended down 1.3%, while the Hang Seng index in Hong Kong was down 3.0%. The S&P/ASX 200 in Sydney ended down 1.1%.
The pound was quoted at $1.1958 early Monday, down from $1.2040 at the London equities close Friday.
Brent oil was trading at $105.85 a barrel on Monday morning, down from $106.00 late Friday. Gold stood at $1,738.11 an ounce, lower against $1,744.88.
Copyright 2022 Alliance News Limited. All Rights Reserved.
