UK economic ‘warning light’ clobbers FTSE

The FTSE 100 suffered after troubling economic data at home and overseas increased fears of a recession.

London’s blue-chip index slid 103.02 points lower to close at 7,147.88 after figures showed that the German economy contracted in the second quarter, indicating the European powerhouse could be heading for a recession. Meanwhile both UK and US yield curves inverted, an interest rate drop often seen as a warning light for the economy.

Connor Campbell, financial analyst at Spreadex, said: “The relief granted by yesterday’s surprising tariff delay was short-lived. The markets instead spent Wednesday afternoon gripped by recession fears after both the US and UK suffered inverted yield curves.”

Aberdeen’s Firstgroup announced it will replace Virgin to run the west coast train route. The transport giant’s joint venture with First Trenitalia will service the London to Glasgow line. Shares shed 0.4 per cent to close at 114.6p.

Insurance giant Prudential confirmed it will spin off its UK and European arm by the end of the year as it posted an increase in half-year profits.

The group will create a separate FTSE 100-listed company with a market capitalisation estimated at around £7 billion. Prudential shares lost 4.1 per cent to close at 1,434p.

Earnings at car dealership Lookers slumped in the first half of the year as sales of new vehicles in Britain continued to decline.

Profit before tax dropped 39.7 per cent to £24.9 million in the six months to 30 June. Shares closed 4.6 per cent higher at 46p.