Off The Wire
London stocks slump as recession risks dent appetite
May 12 (Reuters) - UK shares dropped on Thursday as risk appetite shrank after data showed the British economy weakened in March, and persistently hot U.S. inflation data exacerbated investors' fears of aggressive rate hikes.
Banking stocks (.FTNMX301010) dropped 2.0% as the likelihood of an economic slowdown and of recession in Britain weighed on cyclical stocks, senior analyst at Swissquote Bank Ipek Ozkardeskaya said.
"There is a rising fear that economic slowdown is going to be the major theme this year and the Bank of England also said it is expecting a recession before the end of this year. The data is a confirmation that UK recovery is slowing down," Ozkardeskaya said.
Data showed Britain's economy unexpectedly shrank by 0.1% in March, but expanded by 0.8% for the first quarter of 2022 as a whole, in what is likely to have been a high point for 2022 as the cost-of-living crisis increasingly bites. read more
Adding to concerns, Deputy Governor Dave Ramsden told Bloomberg News that the Bank of England will have to increase borrowing costs to control rapid inflation. read more