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* BA-owner IAG trades near 1-month low
* Beazley gains after posting surge in gross premium
* FTSE 100 down 1.5%, FTSE 250 sheds 1.4%
May 6 (Reuters) - UK stock indexes posted their biggest
weekly declines in two months on Friday, hit by a recession
warning from the Bank of England and disappointing results from
the owner of British Airways.
International Consolidated Airlines Group tumbled
8.3% after it reported a bigger-than-expected quarterly
operating loss and scaled back plans to ramp up short-haul
flights at Heathrow airport.
The blue-chip FTSE 100 closed down 1.5% and the
domestically oriented midcap FTSE 250 index fell 1.4%,
resulting in weekly losses of 2.1% and 4.3%, respectively.
The Bank of England (BoE) warned on Thursday that Britain
risked the double-whammy of a recession and inflation above 10%
as it raised interest rates to their highest since 2009.
"The gloomy economic outlook will likely limit the BoE's
ability to tighten policy aggressively," analysts at BCA
Research said in a note.
The FTSE 100, however, has outperformed major stock markets
so far this year as a surge in oil and metal prices, as well as
weakness in sterling, boosted commodity giants and exporters.
"The FTSE 100 is exposed to all the sectors that are causing
inflation concerns, and that benefits the UK equity market,"
said Caroline Simmons, UK chief investment officer at UBS Global
Wealth Management, who expects the index to hit 8,100 by the end
of the year.
"It hurts the economy because of the consumer squeeze but it
benefits the FTSE 100. Now, of course, sterling has weakened and
that's also helpful."
Sterling dropped below 1.23 against the dollar for the first
time in nearly two years on concerns about the economic outlook
as well as local elections.
British Prime Minister Boris Johnson's Conservative Party
lost control of traditional strongholds in London and suffered
setbacks elsewhere in local elections, with voters punishing his
government over a series of scandals.
Among the bright spots, insurer Beazley Plc gained
5.9% after it reported a surge in quarterly gross written
Digital advertising group S4 Capital jumped 9.8%
after delayed full-year results showed a 44% increase in 2021
(Reporting by Sruthi Shankar in Bengaluru
Editing by Vinay Dwivedi and Mark Potter)