Stock prices were set to end a frightening week sharply lower, after disturbing headlines about a nuclear power plant chased more money out of risk assets.
Investors also were awaiting the key US jobs report for February later Friday.
Ukraine accused the Kremlin of ‘nuclear terror’ and the West expressed horror on Friday, after Europe’s largest atomic power plant was attacked and taken over by invading Russian forces. Blasts lit up the night sky as the plant at Zaporizhzhia came under shell fire, while Russian troops advanced in southern Ukraine and bombarded several cities elsewhere.
An explosion at Zaporizhzhia would have equalled ‘six Chernobyls’, Ukrainian President Volodymr Zelensky said, referring to the plant in Ukraine that was the site of the world’s worst nuclear disaster in 1986.
The FTSE 100 index was down 222.03 points, or 3.1%, at 7,015.43 midday Friday - adding to Thursday’s 2.6% drop. The blue-chip index is down 6.4% so far this week.
The mid-cap FTSE 250 index was down 574.70 points, or 2.9%, at 19,505.00, on top of Thursday's 3.4% decline. The AIM All-Share index was down 28.55 points, or 2.8%, at 976.09.
The Cboe UK 100 index was down 3.0% at 698.65. The Cboe 250 was down 3.2% at 17,166.14, and the Cboe Small Companies down 2.4% at 14,220.19.
In mainland Europe, the CAC 40 in Paris and the DAX 40 in Frankfurt were both 3.2% lower.
‘With the invasion of Ukraine by Russia now into its second week, stock markets continue to battle the threat of even higher inflation and a potential economic slowdown,’ Russ Mould, investment director at AJ Bell, said.
‘Soaring commodity prices imply the cost of living is going up again, and it affects people around the world. If costs are going up again, corporates must either stomach lower profit margins or risk passing on the costs to the end user. At some point soon consumers will not be able to cope with even higher prices, so corporates face a big demand test.’
Banks in London were suffering from the risk-averse mood. HSBC shed 5.1%, Lloyds 4.9%, Barclays 5.3%, and NatWest 3.5%.
Travel stocks were also in the red, with British Airways-owner, International Consolidated Airlines Group down 5.0%, and Rolls Royce, with its large aerospace businesses, down 5.9%.
Mondi shed 5.0%, amid concerns about the packaging firm’s exposure to the conflict. Operations in Russia represented around 12% of the company's 2021 revenue.
Among the few green shoots in the FTSE 100, Russian-linked firms Evraz and Polymetal International were staging a small recovery amid some bargain hunting - advancing 20% and 23% on Friday. This week, Evraz has shed 62% and Polymetal 55%.
Both companies were demoted from the FTSE 100 as part of the latest index review changes after collapsing in value since Russia launched its attack on Ukraine.
Mexican precious metals miner Fresnillo gained 5.1%, benefiting from continued high commodity prices. Midcap miners Hochschild and Centamin added 3.7% and 1.7%, respectively.
The chair of Centamin, James Rutherford, resigned as a non-executive director of Evraz, effectively immediately, having only joined the board in June of last year.
Gold stood at $1,946.20 an ounce midday Friday, higher from $1,928.05 late Thursday. Brent oil was quoted at $112.64, down from $113.62 late Thursday. It had hit an intraday high of $119.84 on Thursday.
Back in London, Morgan Advanced Materials advanced 11%. The Windsor, England-based industrial products manufacturer reported it had swung to profit in its full year, as its restructuring process paid off and margins were at their highest in decades.
Morgan Advanced swung to a pretax profit of £104.3 million in 2021, up from a loss of £13.1 million in 2020. This was strong progress towards recovering pre-pandemic profit of £109.7 million in 2019, coming just 4.9% short.
Revenue was up 4.4% to £950.5 million from £910.7 million. On an organic constant currency basis, revenue grew 10%, ahead of the company’s November guidance of a range of 7% to 9% growth. This figure however was 9.5% behind the £1.05 billion achieved in 2019.
Morgan Advanced said demand had recovered over 2021, following the ‘sharp slowdown’ in 2020, but the recovery of demand and the pandemic caused supply chain disruption and inflated costs of materials and labour.
The pound was quoted at $1.3287 midday Friday, down from $1.3341 at the London equities close Thursday.
The euro was priced at $1.0978, down from $1.1047. Against the yen, the dollar was trading at JP¥115.39, lower against JP¥115.63.
Looking ahead, New York was pointed to a lower open ahead the monthly jobs report at 1330 GMT.
The Dow Jones Industrial Average was called down 0.7%, the S&P 500 down 0.8% and the Nasdaq Composite down 0.7%.
Pierre Veyret, an analyst at ActivTrades, said: ‘Investors may remain patient this morning as a crucial US non-farm payroll data for February is looming in the afternoon, which may provide investors with more clues about the real shape of the US economy as well as the next monetary moves from the Fed, even though a quarter basis point rate hike is now fully priced in.’
XTB Markets Chief Market Analyst Walid Koudmani said the report is expected to show an increase of 440,000 jobs.
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