By Devik Jain
(Reuters) -Commodity stocks and banks led a near 2% drop in London's FTSE 100 on Monday as fears of a global economic slowdown sapped sentiment at the start of a week loaded with corporate earnings.
After falling as much as 2.4%, the blue-chip index pared some losses to close down 1.9% at its lowest in more than five weeks.
The domestically focused mid-cap FTSE 250 index ended down 1.4% after hitting its lowest level since March 16.
Oil majors BP (LON:BP) and Shell (LON:RDSa) lost 6.2% and 5.2%, respectively, and the industrial mining sub-index sank 5.6% on worries that prolonged COVID-19 lockdowns in China would weigh on demand for metals and crude oil. [O/R][MET/L]
Broadly, traders ditched riskier assets as relief over Emmanuel Macron's victory in the French presidential election quickly gave way to renewed concerns about rising global interest rates and China's spluttering economy. [GLOB/MKTS]
Banks dropped 3.2%, with Asia-focused lenders HSBC Holdings (LON:HSBA) and Standard Chartered (LON:STAN) slipping ahead of their results this week.
"Having spent most of the last few weeks trying to put to one side concerns about events in eastern Europe, a slowdown in China, and the increasing risks of what inflation might do to company earnings, as well as consumer incomes, the final straw appears to be a concern about the prospect of a policy mistake by central banks, and a possible recession by the end of the year," Michael Hewson, chief market analyst at CMC Markets UK said in a note.
Bank of England Governor Andrew Bailey said on Friday the central bank could deal with the fast rise in inflation without damaging the economy, but the path was a narrow one.
McColl's Retail Group slumped 53.1% as the British convenience store chain forecast tepid annual core profit after a weaker-than-expected Easter performance, dented by lower consumer spending and supply chain disruptions.