The FTSE 100 closed 77.80 points lower, or 0.7%, at 10,639.17 on Thursday, as oil prices surged above $100 a barrel for the first time since May following attacks on Saudi oil tankers by Yemen’s Iran-backed Houthi rebels. The FTSE 250 dropped 1.3% to 23,627.33, and the AIM all-share fell 0.8% to 768.76. In Europe, the CAC 40 in Paris and the DAX 40 in Frankfurt both ended 1.6% lower.
The pound weakened to $1.3303 from $1.3377 at Wednesday’s close, and eased to €1.1696 from €1.1717. Brent crude rose to $100.98 a barrel from $93.74 late Wednesday. US President Donald Trump threatened to hold Iran responsible for the Houthi attacks, warning of “major military punishment”. Oil majors BP and Shell gained 3.1% and 1.6% respectively.
The European Central Bank kept interest rates unchanged as expected, but President Christine Lagarde struck a hawkish tone, suggesting that the surge in energy prices could reignite inflation and potentially require another rate hike as soon as September. In the US, stocks fell, with the Dow down 1.3%, the S&P 500 losing 1.6% and the Nasdaq falling 2.7%. US jobless claims unexpectedly fell to 187,000 from a revised 209,000.
In London, Segro led the FTSE 100, jumping 6.5% after recommending a £14 billion takeover proposal from Prologis. Centrica, owner of British Gas, fell 10% after reporting a swing to a pre-tax profit of £672 million in the first half from a £43 million loss a year earlier, but giving a cautious outlook for its retail division.
