London stocks end lower as HSBC, British American Tobacco weigh

FILE PHOTO: Signage is seen outside the entrance of the London Stock Exchange in London, Britain. Aug 23, 2018. REUTERS/Peter Nicholls

(Reuters) - London’s bluechip index slid on Tuesday, weighed down by forecast cuts from British American Tobacco, while HSBC dropped after a leading shareholder said it was uneasy over the company’s decision to back a new security law in Hong Kong.

HSBC HSBA.L fell 3.6% and was the biggest weight on the FTSE 100 index .FTSE after Aviva Investors, a top-20 investor in both the bank and peer Standard Chartered STAN.L, raised concerns over their support for the law.

The blue-chip FTSE 100 declined 2.1%, with cigarette maker British American Tobacco Plc BATS.L falling 3.1% after it flagged a demand hit due to prolonged lockdowns in South Africa and Mexico and weak sales in Bangladesh and Vietnam.

The British mid-cap index .FTMC declined 2.1%, weighed down by major industrials and real estate stocks.

“There isn’t the same amount of enthusiasm or risk appetite right now for London stocks as opposed to the sentiment we are seeing for U.S. or Asian stocks,” said David Madden, markets analyst at CMC markets UK.

“There is a pause in optimism among investors as London stocks have underperformed other markets globally even before the lockdown restrictions were put to place and continue to show weakness in contrast to other markets (U.S. and Asia).”

But British stocks have marked a striking rise from lows hit in March on hopes of an economic recovery after coronavirus-driven curbs on social and business activity were eased.

Among shares, Bellway Plc BWY.L dropped 5.7%, dragging its peers down with it, as the housebuilder sold fewer homes between August and May due to restricted business activity induced by the coronavirus lockdown.

Royal Dutch Shell Plc RDSa.L said it will restart drilling and begin redeploying some non-essential personnel on some of its offshore assets in the Gulf of Mexico on Monday and Tuesday as conditions improve following tropical storm Cristobal. Shares of the company, however, fell 4.4% tracking weaker oil prices. [O/R]

Reporting by Shreyashi Sanyal and Shashank Nayar in Bengaluru; editing by Uttaresh.V and Lisa Shumaker