UK shares fell on Thursday following reports of Ukrainian forces and pro-Moscow rebels trading fire, while weakness in financials and energy stocks further dented sentiment.
The blue-chip FTSE 100 (.FTSE) declined 0.9%, extending losses from Wednesday, after data showed consumer prices rose at the fastest annual pace in nearly 30 years last month.
Russia-backed rebels and Ukrainian forces traded accusations on Thursday that each had fired across the ceasefire line in eastern Ukraine.
Oil majors BP and Shell (SHEL.L) fell 1.4% and 2.7%, respectively, tracking crude prices as talks to resurrect a nuclear deal with Iran entered their final stages, but losses were limited by the Ukraine crisis.
Stronger energy prices have helped the commodity-heavy FTSE 100 weather geopolitical tensions better than its pan-European counterparts (.STOXX), with BP and Shell gaining more than 20% so far since the start of 2022.
Banking stocks (.FTNMX301010) slipped 1.3%, tracking weakness in British two-year government bond yields which fell sharply for a second straight day.
The domestically focussed mid-cap index (.FTMC) fell 1.2%, with travel stocks (.FTNMX405010) dropping 1.8%.
“Travel and leisure is always going to get hit when you have geopolitical concerns in Eastern Europe,” Michael Hewson, chief markets analyst at CMC Markets, said.
Wizz Air (WIZZ.L) and Air France KLM-SA (AIRF.PA), both down 7.4% each, were airlines that do a lot of business in that region, Hewson added.
Standard Chartered (STAN.L) reversed early losses to end 1.7% higher after the lender raised its core profitability goals and promised shareholders extra payouts, despite full year profit undershooting expectations, as it banks on inflation-battling rate hikes worldwide to boost lending.
Reckitt Benckiser Group (RKT.L) jumped 5.9% and was the biggest gainer on the blue-chip index after beating estimates for fourth-quarter sales, as heightened fears about COVID-19 led to increased demand for its cleaning products.