UPDATE 2-London stocks slide as recession worries grow

* U.S. central bank chief warns of prolonged economic slump
* Housebuilders slide as surveys suggest fall in prices
* Lloyd's of London estimates COVID-19 bill at up to $4.3
bln
* Investment management firm 3i rises after keeping dividend
* FTSE 100 down 2.8%, FTSE 250 slip 3%

(Adds comments, updates to close)
By Shreyashi Sanyal and Sagarika Jaisinghani
May 14 (Reuters) - UK stocks closed firmly in the red on
Thursday as investors worried that a recovery from a
coronavirus-led economic slump would be slower than expected
even as several hard-hit countries started easing lockdowns.
The blue-chip FTSE 100 was down 2.8%, with battered
energy and travel and leisure stocks
down nearly 4%. The mid-cap FTSE 250 shed 3%.
Insurance stocks fell 3.7% after Lloyd's of
London said it was likely to pay up to $4.3 billion in claims
related to the COVID-19 pandemic, while underwriting and
investment losses for the global non-life insurance sector could
reach a record $203 billion.
The two main UK stock indexes have now given up all the
gains made this month as hopes of a speedy revival in business
activity were dashed after U.S. Federal Reserve Chair Jerome
Powell warned of an "extended period" of weak economic growth.

Even as some easing of lockdown restrictions and a raft of
stimulus measures helped global equities rebound in the recent
few weeks, investors remained cautious of a second wave of new
coronavirus infections.
"If a second surge were to take place, overwhelming health
infrastructure, governments may find themselves with little
choice but to reintroduce lockdowns," said Seema Shah, chief
strategist at Principal Global Investors.
"In that worst-case scenario, even the most monstrous policy
stimulus could not support continued equity market gains."
On Wednesday, the UK posted its sharpest ever GDP
contraction in March, with economists warning the slump could be
worse in April. For the year, the Bank of England has predicted
the worst recession in three centuries.
Data out of the United States continued to show more
distress in its labour market as Americans filing for
unemployment benefits rose to 2.981 million for the week ended
May 9.
With the UK starting to ease some restrictions, housebuilder
Persimmon said it had restarted 65% of its construction
work and was reopening sales offices on May 15.
However, its shares fell 4.7% along with the wider
housebuilding index as surveys suggested British
house prices would only recover to their pre-lockdown levels in
11 months' time.
WH Smith reported an 85% slump in group sales in
April, although a 400% rise in online book sales helped offset
some of the damage from the closures of its kiosks and stores,
sending its shares slightly higher in morning trading.

Investment management firm 3i Group Plc rose 6.3% to
the top of the FTSE 100 after sticking to its plan to pay a 2020
dividend at a time when a slate of UK companies have cancelled
payouts to shore up liquidity.

(Reporting by Shreyashi Sanyal, Sruthi Shankar and Sagarika
Jaisinghani in Bengaluru; Editing by Anil D'Silva and Lisa
Shumaker)