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(Alliance News) - Losses for London stocks accelerated as Wednesday's session progressed, with the FTSE 100 held down by a slide in oil prices over demand worries.

Markets look to the afternoon with caution given a raft of earnings are due from major US banks.

The blue-chip FTSE 100 was down 120.70 points, or 2.1%, at 5,670.61 midday on Wednesday. The mid-cap FTSE 250 index was down 558.07 points, or 3.5%, at 15,524.50. The AIM All-Share index was down 1.8% at 740.39.

The Cboe UK 100 index was down 2.2% at 9,586.39. The Cboe 250 was down 3.6% at 13,388.49, and the Cboe Small Companies down 0.4% at 8,610.47.

In mainland Europe, the CAC 40 in Paris was down 1.9% while the DAX 30 in Frankfurt was down 2.1% in the afternoon.

"Today's uncertain market sentiment comes after investors started to digest the first few earnings reports with the financial sector publishing mixed results on Tuesday. This blurry picture is making it hard for traders to properly evaluate the impact of Covid-19 to companies with investors preferring to limit their exposure to riskier assets like shares," said Pierre Veyret, technical analyst at ActivTrades.

"The recent announcement from President Trump about a possible re-opening of the US economy in May didn't boost market sentiment as most investors are more focused on profitability and fear a premature reopening of economies could bring severe damage in the long run," said Veyret. "Markets are likely to remain volatile today as the release of the latest figures on US crude oil inventories and US retail sales are looming in addition to earnings from Citigroup, Bank of America, Goldman Sachs and Morgan Stanley."

Ahead of the bellwether bank earnings, Wall Street is pointed to a lower open on Wednesday. The Dow Jones is pointed down 1.5%, the S&P 500 down 1.7% and the Nasdaq down 1.2%.

US President Donald Trump ordered a freeze on funding for the World Health Organization for "mismanaging" the coronavirus crisis, as world leaders weighed easing lockdowns that threaten to tip the global economy into a second Great Depression.

The death toll from the pandemic has topped 125,000, with nearly two million people infected by the disease that has upended society and changed lives for billions confined to their homes around the globe.

World leaders are agonising over when to lift lockdown measures to jump-start devastated economies but still avoid a second wave of infections.

And with the world battling to get on top of the pandemic, the US President fired a broadside at the WHO and halted payments that amounted to USD400 million last year.

Nevertheless, Trump vowed to reboot large sections of the world's top economy "very soon," saying the US would reopen "in beautiful little pieces", with the hardest-hit areas such as New York taking slightly longer.

Italy, one of the hardest-hit nations, allowed bookshops, launderettes, stationers and children's clothing retailers to re-open, but many business owners chose to stay shut. Spain has allowed work to restart in some factories and construction sites, and Denmark opened schools on Wednesday after a month-long closure, while Germany was expected to ease some lockdown measures.

The euro traded at USD1.0906 on Wednesday, down from USD1.0962 late Tuesday. Sterling was quoted at USD1.2497, lower than USD1.2597 at the London equities close on Tuesday.

Against the yen, the dollar was quoted at JPY107.36, up on JPY107.15 on Tuesday.

The economic calendar has US retail sales at 1330 BST and an interest rate decision from the Bank of Canada at 1500 BST.

Meanwhile, oil prices extended their slump Wednesday as markets deemed OPEC's latest production cuts as insufficient to deal with the huge slump in demand.

Brent oil was trading at USD29.81 a barrel midday Wednesday, down from USD30.08 late Tuesday.

The International Energy Agency on Wednesday warned global oil demand will fall by a record amount this year due to Covid-19. For 2020 overall, demand will fall by 9.3 million barrels per day, with April alone down 29 barrels a day from a year earlier to levels last seen in 1995, the IEA said in its latest monthly report.

While noting the OPEC+ agreement at the weekend to cut oil production by 9.7 million barrels a day, the IEA warned that "there is no feasible agreement that could cut supply by enough to offset such near-term demand losses".

The benchmark WTI contract tumbled just below USD19.20 per barrel on Wednesday, its lowest price in 18 years.

London's oil majors were trading in the red at midday, adding to Monday's losses. BP was down 4.8% while Royal Dutch Shell A and B shares were down 4.3% and 4.9% respectively.

Safe-haven metal gold was quoted at USD1,722.85 an ounce on Wednesday, lower than USD1,734.53 on Tuesday but still up more than 4% this week.

Elsewhere on the London Stock Exchange, insurers were topping and tailing the FTSE 250.

Hasting Group, up 4.3%, said it still intends to pay its 2019 final dividend as it reported gross written premiums remained stable in the first quarter.

Gross written premiums for the three months ended March 31 dipped 0.5% to GBP234.3 million from GBP235.5 million the year before, while net revenue was 2.1% lower at GP179.2 million versus GBP183.1 million.

Motor insurance accident frequencies reduced during March, Hastings noted, with this trend expected to continue for the duration of Covid-19 travel restrictions.

At present, Hastings is still intending to seek shareholder approval for paying a final 2019 5.5p dividend at its May 21 annual general meeting. This represents a 39% drop from its final 2018 dividend.

Hiscox, meanwhile, slumped 16%. The UK Financial Conduct Authority has said insurers liable for claims to cover business interruption due to coronavirus must pay out "as soon as is possible" to help small businesses survive the lockdown.

Hiscox is one of the insurers in the firing line, with the Hiscox Action Group set up by a group of brokers and loss adjusters to look at whether or not they have a case to take legal action.

Over the weekend, The Times reported that a group led by PR firm Media Zoo is alleging that Hiscox is trying to avoid paying out for what they believe are legitimate claims. The firms have written a letter to UK Business Secretary Alok Sharma, which said Hiscox "refused to pay for legitimate business interruption claims", according to The Times.

Elsewhere in London, Costain shares surged 42% after the UK government gave formal approval for the HS2 project to begin the construction phase.

Notice to proceed has been given to the four joint ventures previously awarded main works civil contracts. That means the firms can transition from carrying out scheme design and preparatory work to detailed design and construction.

Costain said its Skanska Costain Strabag joint venture received a notice to proceed on the design and construction of phase 1 of HS2 in the southern area. Its work will include digging tunnels for the approach of the railway line into London Euston station.

Costain said the contract is worth GBP3.30 billion to the joint venture as a whole, but it won't make a significant contribution to Costain's profit until financial year 2021 onwards. This is because construction is paused during the Covid-19 lockdown.

By Lucy Heming; lucyheming@alliancenews.com

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