The FTSE 100 was shunted into the red on Thursday as investors grow increasingly wary that peace in Ukraine may not be achieved soon, while Brewin Dolphin soared in the midcaps after receiving a £1.6 billion offer.
The Kremlin played down hopes of a breakthrough following peace talks between Russian and Ukrainian delegates in Istanbul a day earlier.
‘We cannot state that there was anything too promising or any breakthroughs,’ Kremlin spokesman Dmitry Peskov told reporters on Wednesday. ‘There is a lot of work to be done,’ Peskov said. He added that Moscow considered it ‘positive’ that Kyiv had started outlining its demands in writing.
‘We carefully avoid making statements on the matters’ that are discussed at the talks because ‘we believe that negotiations should take place in silence’, he added. Moscow's lead negotiator, Vladimir Medinsky, described talks in Istanbul on Monday as ‘meaningful’.
The FTSE 100 index closed down 63.07 points, or 0.8%, at 7,515.68. The mid-cap FTSE 250 index lost 112.40 points, or 0.5%, to 21,160.07. The AIM All-Share index ended down 4.32 points, or 0.4%, at 1,042.36.
The Cboe UK 100 index closed down 0.4% at 749.71. The Cboe 250 ended down 0.4% at 18,636.25, and the Cboe Small Companies lost 0.1% at 15,350.31.
In Paris the CAC 40 stock index ended down 1.2%, while the DAX 40 in Frankfurt ended down 1.3%.
In the FTSE 100, Pearson ended the best performer, up 2.1%, after Barclays started coverage on the education publisher at 'equal weight'.
Pearson was also rebounding after it said Wednesday after it rejected a third takeover proposal by Apollo Global Management ‘significantly’ undervalued the company and its future prospects. The stock ended down 5.9% on Wednesday.
In the FTSE 250, Brewin Dolphin was the biggest gainer, up 61% at 512.00 pence, as the financial adviser agreed to a £1.6 billion buyout from Royal Bank of Canada.
RBC will pay 515p per Brewin Dolphin share, a 62% premium to its 318p closing price on Wednesday. RBC shares were off 0.4% in Toronto.
The buyout is an ‘exciting strategic opportunity’ for RBC, allowing the Toronto-based lender to combine its UK and Channel Islands wealth management arm with the FTSE 250 constituent.
Brewin peers Rathbones, Brooks Macdonald and Quilter ended up 12%, 6.1% and 2.3% respectively in a positive read-across.
Trainline ended the second-best mid-cap stock, up 26%, after the train and coach ticketing platform reached an agreement to amend its third-party retail licence. The move provides Trainline with ‘greater certainty’ even though it is likely to see a cut in commission.
The pound was quoted at $1.3155 at the London equities close, down from $1.3163 at the close Wednesday.
On the economic front, the UK economy expanded at a faster pace than expected in the fourth quarter of 2021, data from the Office of National Statistics showed, despite the emergence of the Omicron variant.
Gross domestic product expanded 1.3% quarter-on-quarter in the final three months of last year. The figure topped the previous estimate, which showed 1.0% growth.
The revision means that the UK economy actually ended last year larger than it was two years earlier, before the emergence of Covid-19.
Annual GDP growth for the quarter was bumped up to 6.6% from 6.5%. In the third quarter, it had risen 6.9%.
The euro was priced at $1.1111 at the European equities close, down from $1.1163 late Wednesday. Against the yen, the dollar was trading at JP¥121.43, down from JP¥121.94.
Stocks in New York were lower at the London equities close amid heightened US inflationary fears.
The DJIA was down 0.3%, the S&P 500 index down 0.4% and the Nasdaq Composite down 0.2%.
Data from the US Bureau of Economic Analysis showed inflationary pressures accelerated in February, though at a slower pace than expected.
The personal consumption expenditures price index accelerated to 6.4% yearly in February from 6.0% in January. February's figure came in below market estimates of 6.7%.
Core PCE, which excludes food and energy and is the Federal Reserve's preferred inflation gauge, accelerated to 5.4% yearly in February from 5.2% in January. The core PCE figure was just shy of the FXStreet-cited market estimate of 5.5%.
Personal consumption expenditures rose 0.6% monthly in February, slowing from 0.5% in January. Monthly core PCE growth ebbed to 0.4% in February from 0.5% in January.
Both figures come amid a backdrop of monetary policy tightening by the US Federal Reserve. However, a higher-than-expected new unemployment claims number and an inflation gauge coming in below estimates could give the central bank something to think about.
The Fed is prepared to raise interest rates by bigger steps than a quarter point if needed to contain ‘much too high’ inflation, Federal Reserve Chair Jerome Powell said earlier in March.
The figures come ahead of the closely-watched US jobs report for March on Friday.
Economists expect an increase of 480,000 new jobs in March, down from 678,000 recorded in February. The unemployment rate is expected to edge lower to 3.7% in March from 3.8% in February.
Brent oil was quoted at $108.02 a barrel at the equities close, down sharply from $113.56 at the close Wednesday.
US President Joe Biden will announce Thursday the release of a record million barrels of oil a day, for about 180 days, from US strategic stockpiles in an attempt to dampen soaring fuel prices in the wake of Russia's attack on Ukraine, the White House said.
The measure will dump a significant amount of supply onto the overheated global oil market, which has sent inflationary shockwaves through the US economy. A six-month release of a million barrels daily will be by far the largest and most sustained ever tapping of the stockpiles in US history. The release would amount to augmenting global supplies by about one percent.
Biden was scheduled to lay out the details in a speech later Thursday.
Elsewhere, ignoring Western pressure to significantly boost production in order to ease prices, the OPEC group of oil producing countries and its Russia-led allies agreed another modest oil output increase.
The 13 members of the Saudi-led Organization of the Petroleum Exporting Countries and their 10 partners backed an increase of 432,000 barrels per day in May, marginally higher than in previous months.
Gold stood at $1,941.55 an ounce at the London equities close, higher against $1,934.80 late Wednesday.
The economic events calendar on Friday has manufacturing PMI readings from the eurozone at 0900 BST, the UK at 0930 BST and the US at 1445 BST.
The UK corporate calendar on Friday has annual results from Medica Group.
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