UK stocks decline for second day on BoE rate hike worries

By Johann M Cherian and Shashwat Chauhan

(Reuters) – UK shares extended losses on Thursday, hit by concerns about further monetary tightening by the Bank of England (BoE), while lower oil prices pulled down energy stocks.

The blue-chip FTSE 100 fell 0.7%, briefly touching a fresh eight-week low intraday.

Both FTSE indices fell sharply on Wednesday after still-high inflation data stoked worries of the BoE staying hawkish for longer.

“These numbers are unacceptable to central bankers and that’s why they’re still quite a bit of concern about where inflation is going,” said Geoffrey Yu, senior EMEA market strategist, BNY Mellon.

“It really matters less where interest rates are going to finish, it matters more how long are they going to stay there, that’s where the uncertainty is.”

Bets of a 13th straight rate hike by the BoE in its next meeting remain elevated.

Rate-sensitive real estate and real estate investment continued to selloff, losing 1.7% each.

UK’s energy sector lost 2.3% to hit a two-month low, as oil prices slumped following Russian Deputy Prime Minister downplaying prospects of further OPEC+ production cuts at its meeting next week. [O/R]

Precious metal miners slipped 2.0%, tracking gold prices lower. [GOL/]

The FTSE 250 fell 0.5%, as Pets At Home slipped 2.6% after the pet care firm reported lower annual pretax earnings.

Johnson Matthey dipped 3.2% after the autocatalyst maker also posted lower annual profit.

Cineworld tumbled 8.2% even after the cinema chain operator said it expected to emerge from bankruptcy protection.

Bucking the trend, Carnival gained 4.7% after Citigroup raised the cruise operator’s rating to “buy” from “hold”.

UK equities have traded rangebound since late April, as investors digested corporate earnings amid U.S. debt deal uncertainties.

Global sentiment remained fragile as the U.S. debt ceiling negotiations continued, as a June deadline inched closer, raising the risk of the world’s largest economy defaulting.

(Reporting by Johann M Cherian and Shashwat Chauhan in Bengaluru; Editing by Sonia Cheema, Shailesh Kuber and Rashmi Aich)