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UK shares slip as subdued GDP data weighs

Mar 12, 2021

By Shivani Kumaresan

(Reuters) – British shares fell on Friday, as data showed that the economy shrank by 2.9% in January, while drugmaker AstraZeneca fell after scaling back its vaccine supply forecast to the European Union.

The blue-chip FTSE 100 index slid 0.2%, with mining stocks, including EVRAZ plc, Glencore Plc and Anglo American falling between 0.3% and 0.7%, hit by a drop in metal prices over demand concerns. [MET/L]

“The sugar rush in the market is beginning to fade and the markets are searching for a new structural catalyst but that may not arrive in the next few weeks,” said Stefan Koopman, senior market economist at Rabobank.

“In the meantime, we may be in for a period of choppy trading and some of the money provided by the U.S. stimulus will be deployed in equity markets.”

A raft of global stimulus has helped the FTSE 100 recover more than 37% from a coronavirus-driven crash last year, but it has lagged its European peer STOXX 600 index on worries about the economic damage from prolonged lockdowns.

Britain’s economy shrank by a less severe than expected 2.9% in January from December, as the country went back into a lockdown and is likely to shrink by 4% in the first quarter of 2021, official data showed.

The domestically focused mid-cap FTSE 250 index fell 0.3%, dragged down by industrials and consumer discretionary stocks.

Luxury group Burberry rose 8.6% to the top of the blue-chip index, as it had witnessed a strong rebound in sales since December which it expected to result in profit for the year to March 27 beating market forecasts.

AstraZeneca Plc fell 0.3%, after cutting its supply forecast of COVID-19 vaccines to the European Union in the first quarter to about 30 million doses, a third of its contractual obligations and a 25% drop from pledges made last month.

(Reporting by Shivani Kumaresan in Bengaluru; Editing by Rashmi Aich)