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* Oil, mining stocks slide to weigh the most on FTSE 100
* Surge in British gas prices fan worries about inflation
* FTSE 100 down 2.9%, FTSE 250 off 1.5%
July 5 (Reuters) - Britain's FTSE 100 index tumbled on
Tuesday, dragged lower by economy-sensitive energy, mining and
financial shares as a surge in natural gas prices after a strike
in Norway fanned worries about inflation and higher risk of a
The blue-chip index fell 2.9% to close at its lowest
level since June 24.
The domestically oriented FTSE 250 index slid 1.5%,
logging its fifth straight day of falls and hitting its lowest
level since November 2020.
Oil majors BP Plc and Shell dropped 7% and
8.5%, respectively, tracking a decline in crude prices.
Banks, life insurers and miners
dipped between 3.6% and 6.6%.
While crude prices fell on recession angst, British gas
prices leapt nearly 16% on concerns about pipeline
supplies from Norway after offshore workers there began a strike
demanding wage hikes.
Adding to the gloom, the Bank of England warned that the
economic prospects for Britain and the world had darkened since
the start of the year and told banks to ramp up capital buffers
to ensure they could weather the storm.
"It's all about timing, how long a downturn might last and
how damaged households and small businesses in particular might
be if the poisonous mix of high inflation and stagnant growth
lingers like a bad smell," Danni Hewson, financial analyst at AJ
"Businesses, trying to scramble back onto their feet now
COVID restrictions are something of a distant memory, are having
to think about repaying any debt right when the cost of simply
doing business is sky-rocketing."
Among the few bright spots, supermarket group Sainsbury's
rose 1.1% after reported upbeat quarterly underlying
Dechra Pharmaceuticals jumped 5.3% after RBC
upgraded the veterinary drugs producer's stock to "outperform"
from "sector perform".
(Reporting by Sruthi Shankar and Devik Jain in Bengaluru;
Editing by Arun Koyyur and Alex Richardson)