By Josephine Mason
LONDON (Reuters) - UK shares fell to three-week lows on Tuesday as investors dumped financial, oil and mining stocks amid renewed fears about Brexit and Rome's budget showdown with Brussels, and Wall Street gloom across tech and retail spread across Europe.
The FTSE 100 (FTSE) ended the day down 0.8 percent, its third straight daily loss, with sentiment also hurt by heavy losses in the euro zone after a report Apple (NASDAQ:AAPL) has cut production triggered a global rout in tech stocks.
While the political drama of last week has largely calmed, investors worried anew about UK Prime Minister Theresa May's struggle to get her draft Brexit deal passed in Brussels and at home, with banks bearing the brunt of the selling.
A warning from the Bank of England that the economy could plunge into a crisis not seen since the 1970s in a "no deal" scenario reinforced those concerns, as companies including mid-cap lender CYBG (L:CYBGC) and Electrocomponents (L:ECM) began triggering contingency plans.
"Market selling has taken hold yet again today, with U.S. markets falling into negative territory for the year. Meanwhile, Brexit uncertainties continue to stifle market clarity for the pound and FTSE 100," said IG market analyst Joshua Mahony.
Banks (FTNMX8350) and insurers (FTNMX8570), down 1.6 percent and 2.3 percent respectively, accounted for most of the losses.
Mining companies fell 1.9 percent as fresh concern about mounting tensions between China and the United States weighed on metals prices, and oil shares were hit by falling crude prices amid signs of growing supplies. U.S. crude hit its lowest in more than a year. [O/R]
Among the few corporate earnings as the results season draws to a close, Compass Group (L:CPG) and Halma (L:HLMA) were in demand, rising 5.4 percent and 3 percent respectively, as investors cheered cost-cutting efforts.
"With labour inflation the key concern across the sector currently, we think that investors may breathe a sigh of relief with 'in line' results and positive commentary on the top line and margin outlook," said Barclays (LON:BARC) analysts of Compass.
Electrical engineering company Spectris (LON:SXS) on the FTSE 250 jumped 12 percent after its numbers, closely followed Plus500 which rose 11.3 percent following better-than-expected results.
In pharma stocks news, Indivior (L:INDV) plunged almost 45 percent in afternoon trade for its worst day on record after a U.S. court gave the go ahead for a generic drug company to sell a copycat of its opioid treatment.
CYBG (L:CYBGC), which owns Virgin Money (LON:VM) and Clydesdale bank, also notched up a record loss for the day after its results disappointed.
Elsewhere, dealmaking was in the news, with BTG (L:BTG) soaring a third and hitting its highest in more than three years after U.S. medical device maker Boston Scientific (N:BSX) agreed to pay 3.3 billion pounds ($4.25 billion) in cash to buy the company.
The stock closed just below the purchase price, which was a 36.6 percent premium over its closing price on Monday.
Among the losers, small cap KCOM (L:KCOM) lost almost a third of its market cap and hit its lowest level in nearly eight years after the IT and communications company issued a profit warning.