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Stocks in London struggled on Thursday with worrying PMI data from across Europe showing an economic slowdown is on the horizon.
The FTSE 100 index closed down 68.77 points, or 1.0%, at 7,020.45. The FTSE 250 ended down 198.24 points, or 1.1%, at 18,692.98, and the AIM All-Share closed down 8.01 points, or 0.9%, at 885.86.
The Cboe UK 100 ended down 1.0% at 700.14, the Cboe UK 250 fell 1.0% to 16,437.15, and the Cboe Small Companies lost 1.0% at 13,468.92.
In European equities, the CAC 40 stock index in Paris ended 0.6% lower, while the DAX 40 in Frankfurt closed down 1.8%.
Frankfurt markets also had to face a worrying gas supply situation in Germany.
German Economy Minister Robert Habeck will declare the ‘alarm level’ of the country's gas emergency plan on Thursday due to an ongoing dispute with Russia, government sources have told dpa.
Fed Chair Powell heads to Capitol Hill on Thursday to speak to a House Committee.
On Wednesday, the Fed chief admitted that a series of aggressive rate hikes meant to cool soaring inflation could eventually trigger a recession in the US.
Hitting the mood further in Europe were poor PMI readings, which did little to calm fears of an economic slowdown.
Growth in the eurozone hit a 16-month low in June, according to a preliminary purchasing managers' index reading from S&P Global.
The composite output index fell to 51.9 points in June from 54.8 the previous month. Any reading over the neutral level of 50 indicates growth.
Manufacturing PMI hit a 22-month low and service sector growth cooled, easing most notably in consumer-facing services. The manufacturing PMI slipped to 52.0 points in June from 54.6 in May. The services PMI fell to 52.8 from 56.1, marking a five-month low.
PMI data from the UK showed that growth in June remained at the 15-month low seen in May.
The June flash UK composite output index was unchanged from the 53.1-point reading in May, posting just above the neutral 50 value for the sixteenth consecutive month and much weaker than the 58.3 average seen in the first quarter of the year.
Manufacturing PMI hit a 23-month low, falling to 53.4 points from 54.6, while the services PMI remained at 53.4 points.
The pound was quoted at $1.2260 late on Thursday, down from $1.2303 at the London equities close Wednesday.
The euro was priced at $1.0517, down from $1.0592. Against the yen, the dollar was quoted at JP¥134.56, lower against JP¥135.89.
Stocks in New York managed to defy the wider market malaise. The Dow Jones Industrial Average was up 0.1%, the S&P 500 up 0.5% and the Nasdaq Composite climbed 1.2%. The indices had lost 0.2%, 0.1% and 0.2% respectively on Wednesday.
Brent oil was trading at $111.15 a barrel late Thursday, unchanged from $111.14 late Wednesday. Gold stood at $1,837.04 an ounce, lower against $1,841.20.
In London, gold miner Polymetal International surged 11%. It said sales of gold from Kazakhstan and Russian mines continue to proceed as usual, but admitted that logistics remained challenging due to China's Covid restrictions, and sanctions imposed on the Kremlin since March.
Although the sale of gold has continued as usual, the St Petersburg, Russia-based miner said its silver inventory has continued to accumulate, as a result of a lack of reliable export channels and a near non-existent domestic market.
Polymetal has started discussions with several potential commercial and industrial international buyers, but noted that silver accounted for less than 5% of its expected sales in 2022.
As a result of the restriction in China and the sanctions, Polymetal had noted slow inventory turnover and higher selling costs, and expects the gap between production, sales and the resulting finished inventory to reach its peak in September.
In spite of this, Polymetal's operations continue undisrupted, and the company has retained its annual production guidance of 1.7 million ounces in gold equivalent.
Polymetal's stock has taken a beating since the war in Ukraine began. Shares are down roughly 80% since the start of the year. It is a former FTSE 100 constituent.
Among large-caps, Ocado closed the best performer, up 5.1%. Shares in the online grocer and warehouse technology firm had fallen earlier in the week on the back of fundraise plans.
Trainline shed 10%, the worst mid-cap performer. The online rail ticketing platform said it continues to make good financial and operational progress, growing strongly in the UK and internationally, and its expectations for the full year remain unchanged.
The move comes as train services were disrupted across the UK again on Thursday as thousands of railway workers staged their second strike of the week.
Members of the Rail, Maritime & Transport union at Network Rail and 13 train operators walked out after talks failed to resolve a bitter row over pay, jobs and conditions. Just one in five trains were running on Thursday and these are mostly restricted to main lines, with around half of the network closed. Services started later than normal at 7.30am local time and will shut down early at 6.30pm.
In addition, boohoo has poached the firm's finance head.
The fast-fashion retailer has hired Shaun McCabe as its new chief financial officer to succeed Neil Catto, who will move to executive director, responsible for strategic projects.
McCabe will step down from the role at Trainline on September 15. Peter Wood, vice president of Finance, will become interim CFO whilst the process to appoint a successor is underway, Trainline said.
boohoo shares fell 3.2%.
Elsewhere in London, Naked Wines plunged 43% after the wine retailer warned that it expects little sales progress in the year ahead.
In its financial year that ended March 28, the Norwich-based online wine retailer posted a pretax profit of £2.9 million, versus a loss of £10.7 million in financial 2021. Revenue increased by 3.0% to £350.3 million from £340.2 million.
For its current financial year 2023, Naked Wines expects group sales in the range of £345 million to £375 million, down 4% in the worst and up 4% in the best scenario on financial year 2022.
Friday's economic calendar has inflation data from Japan overnight before UK retail sales at 0700 BST.
The local corporate calendar has half-year results from travel company On the Beach Group.
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