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British stocks abandon gains as miners tumble; Melrose jumps

09/03/2020 | 12:15pm EST
FILE PHOTO: People walk past the entrance of the London Stock Exchange

London shares closed lower on Thursday as miners weighed down the FTSE 100 index after optimism about more stimulus proved to be short-lived, while shares of Melrose jumped after it signalled a pick-up in some markets.

The blue-chip FTSE 100 slipped 1.6%, with miners <.FTNMX1770> tumbling 4%, while the mid-cap index shed 1.3%.

Turnaround specialist Melrose Industries Plc jumped 12.5% as it said there were signs of a pick-up in some of its markets, excluding aerospace, after the coronavirus crisis slashed its first-half profit by 90% and prompted job cuts.

Trillions of dollars in stimulus and signs of a pickup in business activity have lifted the FTSE 100 from its March lows, but the index is still down about 22% from its pre-pandemic highs as the domestic economy struggles to post steady growth.

Investors have also grown wary of bubble-like signs emerging in the U.S. technology sector, with absolute valuations hitting worrisome levels. [.N]

"Over the course of the coronavirus crisis, we have argued against the view that the surge in the share prices of the five 'big tech' firms is another dotcom-style bubble," said economists at Capital Economics.

"But given how much further they have climbed in recent weeks - and their subsequent falls today - that isn't a fair assessment," they added.

Bank of England Deputy Governor Dave Ramsden on Wednesday hinted at more liquidity as he warned of higher risks to Britain's economy from the coronavirus crisis than spelt out by the central bank last month.

Britain's services PMI showed job losses accelerated in August despite an upturn in demand, in a bleak sign ahead of the closure of the government's coronavirus furlough scheme at the end of next month.

North Sea focused oil producer Enquest tumbled 9.6% after it said its free cash flow of $87.5 million, generated in the first six months of 2020, was about 37% lower from last year.

By Shreyashi Sanyal

© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
ENQUEST PLC 2.15% 13.28 Delayed Quote.17.52%
GLAXOSMITHKLINE PLC 1.13% 1380.2 Delayed Quote.2.85%
LONDON BRENT OIL -0.22% 55.27 Delayed Quote.8.61%
MELROSE INDUSTRIES PLC -2.82% 175.45 Delayed Quote.-1.46%
MSCI UNITED KINGDOM (STRD, UHD) -0.69% 1069.389 Real-time Quote.3.72%
SANOFI 0.05% 81.46 Real-time Quote.3.51%
WTI -0.16% 52.21 Delayed Quote.10.00%
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