By Sagarika Jaisinghani
(Reuters) - UK stock markets fell on Wednesday as data showed a nationwide shutdown crushed retail sales in April, while the economy shrank by a record 5.8% in March in further evidence of the business damage caused by the novel coronavirus outbreak.
The retail index (FTNMX5370) tumbled 1.7% after surveys showed British retail spending plunged by nearly a fifth and a broader measure of consumer spending fell by more than a third in April.
The blue-chip FTSE 100 (FTSE) was down 1.2%, snapping a five-day winning streak and wiping out most of the gains it made this month on hopes that an easing in restrictions would revive business activity.
The mid-cap FTSE 250 (FTMC) also shed 1.2%, with travel stocks (FTNMX5750) plummeting again after a warning from European travel company TUI (DE:TUIGn) about thousands of job cuts to ride out a virtual halt in global travel.
"The UK data certainly signals that we are in for a tough period and that will start to wear on UK equities, particularly on the mid-caps," said Chris Beauchamp, chief market analyst at IG Group.
After rallying in April on a raft of global stimulus, investor sentiment has soured this month on the double whammy from fears of a second wave of COVID-19 cases and rising U.S.-China tensions.
The UK's death toll from the respiratory disease now exceeds 40,000 and is by far the worst yet reported in Europe, an ominous sign as the government starts to reopen an economy crippled by the lockdown measures.
Data on Wednesday showed first-quarter GDP contracted by 2% from the last three months of 2019, with figures for April likely to show an even bigger fall in economic output. For 2020, the Bank of England has predicted the biggest economic slump in 300 years.
"If the economic data remains difficult and we get an uptick in virus cases, that's the kind of thing that will put the cat among the pigeons and cause equities to lose a bit of ground," Beauchamp said.
In the latest sign of the corporate hit from the COVID-19 pandemic, Aston Martin (L:AML) slumped 7.8% to the bottom of the FTSE 250 after posting a first-quarter pretax loss as sales dropped by nearly a third.
Oil and gas producer Premier Oil (L:PMO) fell 3.6% as it said it expected to be free cash flow neutral this year following a crash in oil prices.
But Stock Spirits (L:STCK) jumped 10.1% after posting a jump in first-half earnings as consumers stocked up on liquor ahead of tax hikes in its biggest markets, Poland and Czech Republic.