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(Alliance News) - Falling oil prices which knocked share prices of index heavyweights, BP and Shell, plus a sharp drop in BT, weighed on London's blue-chip index on Tuesday.
The FTSE 100 index closed down 83.62 points, 1.0%, at 8,273.32. The FTSE 250 ended down 171.32 points, 0.8%, at 20,986.15, and the AIM All-Share closed down 2.55 points, 0.3%, at 774.04.
The Cboe UK 100 ended down 1.1% at 826.27, the Cboe UK 250 closed down 0.7% at 18,431.87, but the Cboe Small Companies ended up 0.1% at 16,871.44.
In Europe on Tuesday, the CAC 40 in Paris ended down 0.2%, while the DAX 40 in Frankfurt closed down 0.4%.
In New York at the time of the London close on Tuesday, the DJIA was down 0.3%, the S&P 500 was also down 0.3% and the Nasdaq Composite was down 0.4%.
Brent oil was quoted at USD77.41 a barrel at the London equities close Tuesday, down from USD79.33 late Monday.
The drop knocked share prices in BP, down 2.8%, and Shell, also down 2.8%.
AJ Bell head of financial analysis Danni Hewson said oil prices fell on "hopes of a ceasefire in Gaza and continuing concerns about Chinese demand".
In contrast, the price fall sparked gains in British Airways parent, IAG, and budget airline, easyJet on hopes for lower fuel costs. The two carriers rose 0.9% and 1.3% respectively.
Top of the fallers was BT, down 6.4%, after Sky and CityFibre agreed a long-term partnership that will see Sky launch broadband services on the CityFibre network.
Sky’s full fibre broadband is expected to be available on CityFibre’s full fibre network from next year, CityFibre said in a statement.
The deal sparked concerns that BT's Openreach could face a loss of market share, with Sky a key customer of the London-based telecommunications provider.
But AJ Bell's Danni Hewson thinks CityFibre’s "modest scale and focus on rural areas suggest it shouldn’t be a huge issue".
Segro was another blue-chip casualty, down 2.5%, after UBS downgraded to 'neutral' from 'buy' due to a weaker outlook for logistics rental growth.
While the oil price fell, gold forged ahead once more. Gold was quoted at USD2,512.24 an ounce, against USD2,503.87 at the close on Monday.
The latest rise boosted shares in gold miner Endeavour Mining by 1.2% and gold and silver miner Fresnillo by 0.4%.
Meanwhile, John Wood Group PLC rose 1.4% as it backed guidance despite first-half losses ballooning, just weeks after a Dubai suitor walked away from a GBP1.56 billion proposed takeover.
In the six months that ended June 30, the Aberdeen-based oilfield and engineering services firm said its pretax loss from continuing operating was USD961.7 million, widened from a USD26.0 million loss a year prior.
John Wood said this primarily reflects an impairment of goodwill of USD815 million and USD140 million of charges related to the exit of lump sum turnkey and large-scale engineering, procurement and construction work.
The firm has been the subject of two failed bid sagas, featuring most recently Sidara, and Apollo in 2023.
Panmure Liberum analyst Ashley Kelly thinks the end of the takeover interest from Sidara – due to market conditions, rather than any underlying issues with John Wood – removes a distraction from management and should allow the business to refocus on the longer-term strategy and on winning new business.
Sterling enjoyed another strong day as the dollar remained on offer ahead Jerome Powell's speech at Jackson Hole on Friday. Ahead of that, minutes of the July Federal Open Market Committee meeting will be released on Wednesday.
The pound was quoted at USD1.3020 at the London equities close Tuesday, up from USD1.2980 at the close on Monday. The euro stood at USD1.1105, up against USD1.1063. Against the yen, the dollar was trading at JPY145.67, down compared to JPY146.55.
Elsewhere, Renalytix plunged 21% after terminating sale talks declaring there was no realistic prospect of an offer being made.
Renalytix said it is in talks with "key stakeholders" in the company about "a suitable capital structure and funding". It said its cash runway extends into the fourth quarter of this year based on its cash position of USD4.7 million on June 30.
Meanwhile, Castings fell 9.4% after it flagged continued subdued demand.
The Brownhills, England-based iron casting and machining firm said demand from its commercial vehicle customers, which account for 80% of the company's revenue, continues to remain at a lower level albeit with a potential for a slight increase in autumn.
"Our customers have now indicated that there is unlikely to be any improvement before at least early 2025," the firm said in a statement.
I3 Energy jumped 28% after Gran Tierra Energy launched a cash and shares bid which valued the company at GBP174.1 million.
Under the terms of the acquisition, each i3 Energy shareholder will be entitled to receive one New Gran Tierra share per every 207 i3 Energy shares held, plus 10.43 pence cash per i3 Energy share.
In addition, each i3 Energy shareholder will be entitled to receive a cash dividend of 0.2565 pence per i3 Energy Share in lieu of the ordinary dividend in respect of the three month period ending September 30.
Peel Hunt expects this transaction to bring "multiple benefits, including increased scale and relevance for the enlarged business on both the TSX and LSE, as well as a strengthened and more diversified asset base capable of delivering long-term production, cash flows, and shareholder value."
The corporate calendar in London on Wednesday sees half-year results from Costain and Mobico.
Wednesday's global economic calendar sees UK borrowing data at 0700 BST, and minutes from the July Federal Open Market Committee meeting at 1900 BST.
By Jeremy Cutler, Alliance News reporter
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