The optimism in equity markets in London faded on Wednesday, with stocks pulled back as consumer inflation in the UK was hotter than expected.
The FTSE 100 index closed down 11.75 points, or 0.2%, at 6,924.99. The FTSE 250 ended down a heftier 281.76 points, or 1.6%, at 17,247.55. The AIM All-Share lost 9.51 points, or 1.2%, at 785.97.
The Cboe UK 100 closed 0.2% lower at 692.60, the Cboe UK 250 fell 1.5% to 14,806.44, and the Cboe Small Companies closed 0.7% lower at 12,369.96.
In European equities on Wednesday afternoon, the CAC 40 in Paris lost 0.4%, and the DAX 40 in Frankfurt gave back 0.2%.
The pound fell to $1.1242 Wednesday evening from $1.1291 late Tuesday.
New data showed consumer inflation in the UK was shoved back into double digits in September, which turns the spotlight firmly onto the Bank of England.
The consumer price index rose by 10.1% in September from a year before, according to the Office for National Statistics. The inflation rate picked up from 9.9% in August and returned to the same rate as recorded in July.
The latest figure came in marginally hotter-than-expected, with a reading of 10% expected, according to FXStreet.
AJ Bell's Danni Hewson said stretching household budgets to cover the 'basic necessities of life has become harder and harder'.
'Cutbacks have already been made. Big name brands ditched for value lines in the weekly food shop, thermostats have been dialled down, non-essential journeys put off or abandoned altogether,' she continued.
'The fact that food and energy costs were the main drivers for September‘??s renewed spike won’??t surprise anyone. Staples like bread, cheese, milk and cereals shot up at a pace many people will never have experienced. And even before winter‘??s cold fingers grab hold of our purse strings people are having to pay more to cook that food, with some households declaring ovens no-go areas.'
As consumer prices continue to climb higher, there will now be pressure on the UK's central bank to do more to rein in inflation.
In London, high-street lenders were struggling after the UK government announced it is pondering a new windfall tax on top of the 8% banking surcharge they pay on top of the corporation tax rate. .
Lloyds closed down 4.5%, NatWest 2.5% and Barclays 2.2%.
Oil companies ended higher despite similar reports suggesting they could also be in line for the current windfall tax could be increased further on them.
BP added 2.3% and Shell gained 0.9%.
Just Eat Takeaway gained 2.2%. The online food delivery firm lifted its second-half bottom-line guidance, after a profitable third-quarter, which came despite order numbers falling.
Just Eat said it was adjusted earnings before interest, tax, depreciation and amortisation positive in the third quarter of 2022. It was an outcome that was 'materially ahead' of prior guidance.
In the first half of the 2022 financial year, Just Eat Takeaway had reported an adjusted Ebitda loss of €134.0 million.
Total orders in the third quarter fell 11% to 235.3 million from 265.8 million a year earlier. The total gross transaction value improved 2%, however.
Asos ended as the best performer in the midcaps, rising 12%.
The online clothing retailer reported a swing to annual loss, though it outlined plans to revive its fortunes after performing a 'diagnostic' on its issues.
Revenue in the financial year that ended August 31 rose 0.7% to £3.94 billion from £3.91 billion a year earlier. However, Asos reported a swing to an annual pretax loss of £31.9 million from a profit of £177.1 million.
Among its issues, Asos said, is an underperforming international arm, its supply chain operations, its 'customer acquisition and commercial model', and the need for data and digital improvements.
Over the next 12 months, it will look to improve inventory management, reduce its costs and 'reinforce' its leadership team and culture.
Stocks in New York were lower in mid-morning trade. The Dow Jones Industrial Average was down 0.2%, the S&P 500 down 0.3% and the Nasdaq Composite down 0.4%.
Streaming service Netflix jumped at the open in New York, up 14%, after reporting a strong rise in paid members in the third quarter - with a promise of further growth - sending its shares to rocket in after-hours trading.
In the three months to the end of September, net income slipped to $1.40 billion from $1.45 billion. Diluted earnings per share fell to $3.10 from $3.19.
It recorded 2.41 million paid net additions in the third quarter, down from 4.38 million a year prior but reversing the 980,000 losses in the previous quarter.
The euro traded at $0.9784 Wednesday evening UK time, down from $0.9826 at the time of European equities close on Tuesday.
The dollar rose to JP¥149.77 from JP¥149.24 late Tuesday.
A barrel of Brent oil rose to $90.83 in London from $88.97 late Tuesday. Gold traded at $1,631.50 an ounce late Wednesday, down from $1,647.70 at the London equities close Tuesday.
In the international economic events calendar on Thursday, there is German producer prices at 0700 BST, with eurozone at balance of payments at 0900 BST and US initial jobless claims at 1330 BST.
In the local corporate calendar, there is third quarter results from distribution firm Bunzl, gold miner Centamin and money manager St James's Place.
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