Negotiations between Ukraine and Russia, sponsored by Turkey, led nowhere on Thursday, helping to put an end to a short-lived rebound in shares.
Attention now turns to policy decision by the European Central Bank and inflation figures for February from the US.
‘After the big rally for equities and the euro and even bigger plunge for some key commodity prices on Wednesday, there has been a complete lack of follow-through in those moves,’ ThinkMarkets analyst Fawad Razaqzada said. ‘The latest talks between Russia and Ukraine failed to provide a breakthrough in ending the war. Markets have reacted in the way you would expect.’
The FTSE 100 index was down 90.38 points, or 1.3%, at 7,100.34 midday Thursday. The mid-cap FTSE 250 index was down 148.25 points, or 0.7%, at 19,920.95. The AIM All-Share index was down 1.44 points, or 0.2%, at 985.28.
The Cboe UK 100 index was down 0.8% at 707.06. The Cboe 250 was down 0.4% at 17,516.94, and the Cboe Small Companies was down 0.1% at 14,375.21.
In mainland Europe, both the CAC 40 in Paris and DAX 40 in Frankfurt were down 2.2%.
Investors also were being cautious ahead of the ECB rate decision and US inflation data. The ECB rate decision is due at 1245 GMT, while the US consumer price index will be released at 1330 GMT.
‘There has been some discussion of possible FX intervention by the ECB to support the euro, but there is next to no chance of that being announced at today's press conference, and unless the single currency falls much further we think likely the bank will limit itself to verbal interventions in future,’ said Jack Allen-Reynolds, senior Europe economist at Capital Economics.
‘Indeed, the ECB is more likely to tolerate a moderately weaker euro than before the Ukraine war in order to cushion the blow to eurozone exporters from a collapse in trade with Russia.’
Russia and Ukraine on Thursday failed to find a breakthrough on a ceasefire and other humanitarian issues at the first high-level talks between the two sides since Moscow's invasion.
Russian Foreign Minister Sergei Lavrov and Ukrainian counterpart Dmytro Kuleba met on the sidelines of a diplomatic forum in the Turkish resort city of Antalya for three-way talks joined by Turkey's Foreign Minister Mevlut Cavusoglu.
Kuleba said ‘no progress’ had been achieved on even a 24-hour ceasefire, expressing frustration that ‘it seems that there are other decision-makers for this matter in Russia’.
He also repeated his vow that the country will not give in, saying: ‘I want to repeat that Ukraine has not surrendered, does not surrender, and will not surrender.’
Kuleba described the meeting as ‘difficult’, accusing his Russian counterpart of bringing ‘traditional narratives’ about Ukraine to the table.
Russia is ready to continue talks with Ukraine within the framework of the existing format in Belarus, but it is too early organise a summit meeting between the two countries' leaders, Lavrov said after the meeting with Kuleba.
‘Today's meeting has confirmed that the Russian-Ukrainian format in Belarus has no alternative,’ Lavrov told a press conference.
In London, Russian steel maker Evraz continued to suffer from the fallout of the war, after the UK Financial Conduct Authority on Thursday suspended trading in its shares. The FCA said it suspended trading in the FTSE 100 stock ‘in order to protect investors pending clarification of the impact of UK sanctions’.
Shares were suspended from 11am on Thursday. The stock had fallen 12% so far Thursday. It is down more than 80% in the past month.
Roman Abramovich, a major shareholder in Evraz, on Thursday was sanctioned by the UK for his links to Russian President Vladimir Putin. Branded a pro-Kremlin oligarch, Abramovich was targeted with an asset freeze and a travel ban on Thursday after ministers came under sustained pressure to target him over Moscow's ongoing invasion of Ukraine.
Peers Polymetal International and Petropavlovsk slumped 10% and 28%, respectively.
It wasn't just equities suffering from severe bouts of volatility.
‘Wild swings in oil overnight reflect the febrile nature of markets right now and also just how little visibility investors have,’ AJ Bell investment director Russ Mould said.
‘The 17% drop in crude prices, after UAE signalled a willingness to increase production, would certainly help to reduce inflationary pressures which had intensified since the start of the war. However, oil prices then settled a little higher to leave investors unsure if they are coming or going.’
Brent oil was quoted at $116.61 a barrel midday Thursday in London, down from $121.55 late Wednesday. Gold stood at $2,004.60 an ounce, advancing from $2,000,80 late Wednesday.
Back in London, Spirax-Sarco Engineering advanced 2.9%.
The firm said annual profit rose sharply, aided by a sales performance that topped pre-virus levels. In 2021, pretax profit surged 31% to £314.5 million from £240.1 million. Revenue grew 13% to £1.34 billion, from £1.19 billion in 2020. It also topped 2019's sales figure of £1.24 billion.
Spirax-Sarco declared an annual dividend of 136.0 pence, up 15% from 118.0p in 2020.
Chief Executive Nicholas Anderson said: ‘For 2022 we currently anticipate strong sales growth, driven by record order books and continued global industrial production growth. While adjusted operating profit growth will be reduced by the full-year impact of revenue investments in 2021, we currently anticipate the adjusted operating profit margin in 2022 will still be comfortably above pre-pandemic levels.’
Among London mid-caps, Hill & Smith gained 11% after it reported significantly increased annual profit due to a strong recovery from the pandemic-related disruption in 2020.
In 2021, the Solihull, England-based infrastructure company generated a pretax profit of £50.9 million, up 43% from £35.5 million reached in 2020. This was on a revenue rise of 6.7% to £705.0 million from £660.5 million the year before.
Hill & Smith credited this to a strong recovery in 2021, with all three of its divisions delivering strong revenue and profit growth.
The company declared a final dividend of 19.0 pence per share, delivering a total dividend of 31.0p. This reflects a 16% increase from the 26.7p paid the year prior.
Spirent Communications rose 9.1% after the telecommunications company reported growth in annual profit after navigating all of 2021's challenges.
Pretax profit in 2021 came in at $103.6 million, increasing 8.1% from $95.8 million in 2020. The rise in profit was supported by strong revenue growth, which was up 10% to $576.0 million from $522.4 million.
Spirent declared a final dividend of 4.37 US cents per share, bringing the total annual payout to 6.76 cents. This was 12% higher than 2020's 6.04 cents.
New York was pointed to a lower open on Thursday. The Dow Jones Industrial Average and the S&P 500 both were seen down 0.8%, while the Nasdaq Composite was expected to open 1.1% lower.
The pound was quoted at $1.3167 midday Thursday, up slightly on $1.3165 at the London equities close Wednesday.
The euro was priced at $1.1046, down from $1.1070. Against the yen, the dollar was trading at JP¥115.93, up from JP¥115.77.
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