By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- The U.K.'s FTSE 100 index kicked off
August on a downbeat note and headed for the lowest close since
April on Friday, as investors continued to move out of risky assets
against a background of geopolitical concerns and rate-hike fears
in the U.S.
The benchmark index slumped 1.5% to 6,628.82, on track for a
third straight day in the red.
Risk-sensitive sectors, such as banks and miners, posted the
biggest losses as investors remained wary of the fallout from
tougher sanctions on Russia, Argentina's selective default and a
broader risk-off sentiment triggered on Thursday. U.S. stocks
contributed to the downbeat mood after the Dow Jones Industrial
Average (DJI) skidded more than 300 points on Thursday, partly due
to speculation that solid economic growth figures could trigger a
rate hike.
In London, mining firms declined on Friday, ignoring
better-than-expected manufacturing data from China. Shares of
Glencore PLC dropped 2.8%, Rio Tinto PLC (RIO) lost 2.7%, and BHP
Billiton PLC (BHP) fell 2.4%.
Capita PLC gave up 3.2% after Credit Suisse cut the
business-services company to neutral from outperform.
On a more upbeat note, shares of International Consolidated
Airlines Group SA rose 1.2% after the airline and British Airways
parent reported a jump in second-quarter profit.
In data news, the U.K.'s manufacturing purchasing managers'
index showed the sector slowed more than expected in July and
expanded at the slowest pace in a year.
Rob Wood, chief U.K. economist at Berenberg, said in a note that
the weakness in July was "probably in response to escalating
Ukrainian tensions and mediocre euro-zone growth."
He also noted that this was the lowest reading since U.K. growth
surged last summer, which "raises questions about whether the
recent rapid pace of expansion can be sustained in the second half
of the year."
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