Chinese authorities imposed a new partial lockdown in market centre Shanghai, sending stock markets lower on Thursday, the day after two international institutions lowered their growth forecasts for the world's second-largest economy.
Shanghai will lock down a district of 2.7 million people on Saturday to conduct mass coronavirus testing, city authorities said, as the Chinese metropolis struggles to fully emerge from punishing curbs.
The city eased many restrictions last week, after confining most of its 25 million residents to their homes since March as China battled its worst Covid outbreak in two years.
But the lockdown was never fully lifted, with hundreds of thousands in China's biggest city still restricted to their homes and multiple residential compounds put under fresh stay-home orders.
The southwestern district of Minhang, home to 2.7 million people, will be placed under ‘closed management’ on Saturday morning and all residents will be tested, district authorities said in a social media post on Thursday.
On Wednesday, the Organisation for Economic Co-operation & Development had reduced its forecast for economic growth in China to 4.4% in 2022 from 5.1%. The World Bank cut its own prediction to 4.3% from 5.1%. Both outlooks are short of China's official growth target of 5.5% this year.
The FTSE 100 index was down 37.68 points, or 0.5%, at 7,555.32. The mid-cap FTSE 250 index was down 104.63 points, or 0.5%, at 20,206.36. The AIM All-Share index was down 3.74 points, or 0.4%, at 972.89.
The Cboe UK 100 index was down 0.4% at 752.04. The Cboe 250 was down 0.6% at 17,907.62, and the Cboe Small Companies was down 0.1% at 14,823.25.
In mainland Europe, the CAC 40 in Paris was down 0.5% and the DAX 40 in Frankfurt was down 0.7%.
In Asia on Thursday, Tokyo's Nikkei 225 index finished marginally higher. In China, the Shanghai Composite closed down 0.8%, and the Hang Seng index in Hong Kong was down 0.9%. The S&P/ASX 200 in Sydney lost 1.4%.
‘News of a fresh lockdown in Shanghai sent the market lower in Asia, hitting broader risk sentiment,’ SPI Asset Management's Stephen Innes said.
In the FTSE 100, British American Tobacco was among a handful of stocks in the green, up 1.0% after the Dunhill and Kent cigarette maker maintained annual guidance.
The London-based firm said New Category business is increasingly contributing to its overall performance, and it is confident in delivering its £5 billion New Category revenue and profitability targets by 2025.
BAT maintained its 2022 guidance for revenue growth of 2% to 4% at constant currency and mid-single-figure adjusted diluted EPS growth at constant currency.
At current foreign exchange rates, BAT expects a translation tailwind of 2% on adjusted diluted EPS growth for the half year and 5% for all of 2022.
Avast was up 1.0% after HSBC raised the cybersecurity provider to 'buy' from 'hold'.
BP was up 0.7% after Credit Suisse started coverage on the UK oil major with a 'neutral' rating. Rival Shell was up 0.6% after Credit Suisse initiated the stock at 'outperform'.
In addition, BP and Shell also were tracking spot oil prices higher with Brent quoted at $123.25 a barrel on Thursday morning, up sharply from $122.00 late Wednesday.
In the FTSE 250, Mitie Group was up 4.5%, after the outsourcer said it swung to an annual profit and made an acquisition.
For the financial year that ended March 31, revenue was £4.0 million, up 58% from £2.53 billion last year and it swung to a pretax profit of £52.3 million from a £13.7 million loss.
Turning to shareholder returns, Mitie declared a total dividend for financial 2022 of 1.8 pence, having paid out none the year before. The London-based firm also launched an initial £50 million share buyback programme as part of a strategy to increase returns to shareholders.
Separately, Mitie acquired solar power design, installation and maintenance contractor Custom Solar for up to £12.4 million.
Mediclinic International was up 3.0% at 437.80p after the private hospital operator said its board has rejected a cash takeover offer from existing shareholder Remgro.
The offer was 460 pence per share, plus Mediclinic's proposed final dividend for financial 2022 of 3.0p.
‘The board of Mediclinic (excluding the Remgro representative) considered the proposal, together with its advisers, and concluded that it significantly undervalued Mediclinic and its future prospects,’ the London and Johannesburg-listed company said.
Remgro also is listed in South Africa. Its stock was down 0.2%.
At the other end of the mid-caps, CMC Markets was the worst performer, down 10%.
For the financial year that ended March 31, net operating income was down 31% to £281.9 million from £409.8 million in financial 2021 and pretax profit plunged to £92.1 million from £224.0 million.
The contract-for-difference provider declared a total dividend of 12.4 pence for financial 20222, cut by 60% from 30.6p paid out the year before.
The pound was quoted at $1.2520 early Thursday, down from $1.2545 at the London equities close Wednesday.
The euro was priced at $1.0712, lower against $1.0737. Against the yen, the dollar was trading at JP¥133.59 in London, down from JP¥133.94.
Gold stood at $1,849.33 an ounce, lower against $1,858.48 late Wednesday.
In Thursday's economic calendar, the European Central Bank interest rate decision is at 1245 BST and latest US jobless claims numbers are at 1330 BST.
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